Posted on 10/04/2026 6:11:58 AM PDT by MtnClimber
So here we are, with diesel at $6 a gallon.
Listening to the political conversation, you could easily come away thinking this all started when Iran went to war. In fact, it didn’t. Iran supplied the shock, but we had already built the vulnerability, which is a key distinction.
Yes, the war in the Middle East has disrupted oil flows and tightened global supplies. The Energy Information Administration says that tight global distillate supplies and elevated crude prices are pushing diesel prices higher. U.S. distillate inventories have fallen below their five-year range, while the loss of significant refining and petroleum-product supplies worldwide has tightened the market.
However, while that explains why diesel prices are so high right now, it doesn’t explain how we became so vulnerable to price shocks.
The reality is that America still produces enormous quantities of crude oil. The trouble is that crude oil is not diesel. Before it reaches the tank of the truck delivering your groceries, somebody has to transport it, refine it, and distribute it—and that brings us to the question nobody seems especially interested in asking:
What happened to the refineries?
The newest major U.S. refinery came online in 1977.
There is a technical footnote here. A 45,000-barrel-per-day refinery in Galveston began operating in 2022. Forty-five thousand barrels a day. In the world of American refining, that is practically a microbrewery.
The newest refinery with significant downstream capacity, then, is Marathon’s Garyville, Louisiana, refinery, which began operating in 1977. It has since been expanded to roughly 617,000 barrels per day.
(Excerpt) Read more at americanthinker.com ...
Not yet mentioned in this discussion is the impact of alternate fuels.
Most of the refineries built or modernized in the past 50 years were designed to produce about 60% gasoline, 30% diesel/jet fuel, and 10% LPG and heavy residual.
In the past 50 years the government decided it would be a good idea to subsidize alternate fuels.
1. Grow corn, convert it to ethanol, add it to gasoline. Of course, there were govt subsidies to make this happen. And, of course, this also impacts the cost of food as farmland that formerly grew corn and grains for animal and human consumption is now dedicated to produce fuel for cars.
2. Install windmills and solar panels to produce electricity for the new electric cars. Of course, there were govt subsidies to make this happen.
3. And to make matters worse, the oil refining and marketing business has been bad mouthed by the politicians and the press for over 50 years.
So under these circumstances, why would a refiner invest billions of dollars to produce more diesel/jet fuel and less gasoline with the existing refineries?
2015 17,967,088
2016 18,317,036
2017 18,617,027
2018 18,598,497
2019 18,802,435
2020 18,976,085
Interesting that during the Trump years, the refiners felt comfortable increasing capacity.
This is what happens when green activists want no oil refineries and a ban on oil. They push wind and solar and electric dreams.
New oil refineries must be built. And Trump should work approving them. But Democrats want no new refineries, nuclear reactors, coal, you name it. We have seen so many hectares of farmland go to Obama and Clyburn pushed solar plants.
Emotionalism is easier to sell when people do not see the inner issue.
“A locomotive can move a ton of freight about 423 miles on a gallon of (diesel) fuel.”
I Googled that statement many times and I know from common logic that you can’t get a train to move with just 1 gallon.
AI is so much better than a search.
How many gallons of fuel does an average train use to travel 1 mile?
Grok:
Whole train: A typical freight train (e.g., 100–150 cars, total gross weight of several thousand to 10,000+ tons, with 1–4 locomotives) commonly uses on the order of 5–20+ gallons per mile, depending on load and conditions. Lighter or shorter trains use less; very heavy unit trains or those on steep grades use more.
No its NIMBY’s that are responsible, along with environmentalists who sue to block any progress. They are still active today blocking data centers and gas electrical plants.
Plenty of them on FR whining about Israel first President Trump (their description) starting a war. They are going to sit it out to show him. Absolute idiots!
No, we are still closing them due to democrat policies. See CA for how it goes down.
“New oil refineries must be built“
New refineries no, expand capacity at existing refineries yes, and that has been happening over the last 40 years. The reasons are multiple
1) locals know the value and will work through permitting issues
2) workforce is experienced and can expand from a strong base. Same goes with supporting trades like maintenance and welders etc
3) transportation hub in place: ports, pipelines, rail and existing tankage
4) utilities are in place, power, water, cleanup
5) and expansion will tie to what is lacking in existing ie going toward less favored heavy oil, or increase diesel and jet relative to gasoline
6) it’s the cheaper, lower capital risk
7) you can retire and replace some older, smaller equipment, that is a catastrophe waiting to happen, without shutting down the whole place
8) planning is on-going, designs are already in place on what is the next project to implement. Just hand over the funds
Meanwhile, the rest of the world has been building refineries at a pace and location that doesn’t make sense. For example, and this has emerged in the last 10 years, the US has a huge competitive advantage by tapping low cost natural gas as fuel. It’s the biggest operating expense in a refinery. China and Europe can’t compete economically against it. Yet they’ll all run their refineries flat out, in good times and bad.
At some point, if refineries are not distributed around the country well, and pipelines are not built, regions can end up on the short end of the stick, so to speak. See: California, and the US Northeast. Granted that for CA, that is more an issue of closures, than previous lack of refineries.
Meanwhile, the rest of the world has been building refineries at a pace and location that doesn’t make sense. For example, and this has emerged in the last 10 years, the US has a huge competitive advantage by tapping low cost natural gas as fuel. It’s the biggest operating expense in a refinery. China and Europe can’t compete economically against it. Yet they’ll all run their refineries flat out, in good times and bad.
Well, given that political strife between countries can create large shortfalls of refined products, even in countries on the sidelines (more or less), and refineries in warring countries are an obvious target if things get rough, maybe building of those refineries did make sense after all. The disadvantage of the moment of the past may be advantageous in a crunch. It may also be thought of as insurance of a sort: It takes decades to build a really solid economy. Have it crashed deeply because of a war you weren't even fighting in, and who knows how long recovery may take, especially if idiots or worse come to power due to political turmoil in one's own country, said turmoil caused by economic collapse. Costs come in multiple forms...
Also speaking of costs, the US Northeast nonetheless was significantly importing refined products from Europe, prior to 2022, because those products were cheaper than obtaining said products from US Gulf states. I assume cheap Russian crude oil and natural gas made that possible. I suppose some Russian refined products also came through Euro traders and such, to the USA.
Well, that (on average) works out to about the same figure for miles per gallon to move one ton.
AI is definitely built into the search in my browser (Brave). It gets downright conversational with multiple follow up questions and / or how a search is phrased. That doesn’t prevent it from sometimes contradicting itself in a few lines or even the same sentence, though. It can get almost funny if I point such things out to the “search” field.
There’s usually land to expand into but I would guess a few locations have gotten pinch in over time. But often the expansion is about taking the internals out of a unit, and replacing with advanced designs. Or adding more heaters or coolers on the side that’s not taking a lot of new space. There’s also an advantage of clustering in that there’s a lot of trading between neighbors, intermediate and final products.
The US north and East coast was the heart of refining going into World War 2, with bulk of oil getting tankered out of Texas. There was a tremendous effort to get the ships off the water with oil going by rail and new pipeline.
https://aoghs.org/petroleum-in-war/oil-pipelines-big-inch/
Agreed everyone’s refinery is paying off, whether it was strategic or just a jobs program. What I would argue, though, very few private companies are going to expand significantly because under normal conditions the world tends to be in a glut more often than not. The next 2 or 3 years are going to be great for refining business but they need 10 or more to invest heavily. A government entity might see it differently.
The US has always been more of a gasoline market and the rest of the world diesel. So Europe refiners were shipping gasoline east coast and keeping the diesel. The oil may have gone from Russia to Europe. And meanwhile as another noted, the US has been needing relatively less gasoline with EVs and ethanol standards.
Jennica Pounds —
: on X as @DataRepublican — her book, Unelected: How the NGO-Administrative Complex Seized Power — And How to Get It Back....”
https://x.com/business/status/2107173993157439813
“An idled refinery in the US Virgin Islands — once the world’s largest fuel-making plant“
Here’s one that could get interesting, it is where you can buy in at 10 cents on the dollar, but …. A lot can happen sitting idle in salt p, humid ocean air for five years. As much as there are procedures to mothball correctly the execution tends to suffer when everyone sees their job going away. The upside is there’s room to tie to Venezuela bringing production back up.
Very true!
I used to do engineering consulting work for a South Florida company that made products for the recreational (mostly) saltwater marine boating market. Prior to that I did engineering for a US company that made aftermarket (entertainment) products for the automotive industry, and actually did most of the environmental testing, but most of that was not specifically marine testing, it was for the general automotive (environment). For the later job, I did not do the actual marine environment testing, but, I was "close" -- the engineering dept. was well under 20 people (engineers and techs)and I did a lot of work with the fellow who did much of the marine environment, R&D of all types, and other performance testing. The R&D in both jobs was a lot of fun, including the destructive testing. ;-)
Anyway, that US Virgin Islands refinery is certainly an interesting data point. :-)
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