Bush warns Congress that gasoline buyers fed up

WASHINGTON — President Bush argued today that consumers paying high gas prices won't stand for inaction on energy legislation, even though some lawmakers say nothing they can do would immediately ease the problem.

"My advice is, they ought to keep this in mind: Summer's here, temperatures are rising and tempers will really rise if Congress doesn't pass an energy bill," said Bush, who pressured lawmakers to get an energy bill to his desk before the August recess.

"The American people know that an energy bill will not change the price of gas immediately," he said, "but they're not going to tolerate inaction in Washington as they watch the underlying problems grow worse."

The president outlined his four-point plan to reduce high energy prices: Promote conservation; produce and refine more crude oil in the United States; develop alternative sources of energy, such as renewable ethanol or biodiesel; and help other nations, such as China, to become more energy-efficient to reduce global demand for energy. He said it was time for the United States to expand its nuclear power capacity.

"Today, millions of American families and small businesses are hurting because of high gas prices," Bush said at a forum on energy efficiency. "If you're trying to meet a payroll or trying to meet a family budget, even small increases at the pump have a big impact on your bottom line."

He said the nation must take action now to address the root causes of rising gasoline prices.

"The primary cause of rising gasoline prices is that the global demand for oil is growing faster than global supply," Bush said. "Here in America we've become too dependent — too dependent — on the increasingly limited supply of foreign oil for our energy needs."

Last year net oil imports averaged nearly 11.9 million barrels a day or 58 percent of the crude oil consumed, according to the Energy Information Administration, which projects imports to total 68 percent of consumption by 2025 under current conditions.

The Senate is immersed in what likely will be at least two weeks of debate over energy policy, with much of the rhetoric focused on the need to reduce the country's dependence on imported oil.

Lawmakers have acknowledged that the bill would do little to ensure reductions in oil imports, which accounted for nearly 58 percent of the crude oil used during the first three months of this year.

That is true there is the issue of heating oil

The Hirsch report, while you may or may not agree with its assessment of the future oil situation does provide a more detailed breakdown of current oil consumption than I have been able to find elsewhere. In particular table III-1. In 2003 out of 19.658 million barrels consumed on average daily, 403,000 were used for electrical generation and 877,000 were used in the residential sector (there's your heating oil) compared to 13.079 million barrels used in the transportation sector. About 6.5% of total oil usage if you add residential and electrical generation.

http://www.energybulletin.net/4673.html and follow the link at the bottom or http://www.hilltoplancers.org/stories/hirsch0502.pdf to go directly

Also here is the eia's take on refineries:

Refining/Downstream
The United States experienced a steep decline in refining capacity between 1981 and the mid-1990s. Between 1981 and 1989, the number of U.S. refineries fell from 324 to 204, representing a loss of 3 million bbl/d in operable capacity (from 18.6 million bbl/d to 15.7 million bbl/d), while refining capacity utilization increased from 69% to 87%. Much of the decline in U.S. refining capacity resulted from the 1981 deregulation (elimination of price controls and allocations), which effectively removed the major prop from underneath many marginally profitable, often smaller, refineries.

Refinery closures have continued since 1989, bringing the total number of operable U.S. refineries to 149 in 2003. In general, refineries that have closed have been relatively small and have had less favorable economics than other refineries in their market area. Also, in recent years, some smaller, less-economic refineries that had faced additional investments for environmental reasons in order to stay in business found closing preferable because they predicted that they could not stay competitive in the long term.

While some refineries have closed, and no new refineries have been built in nearly 30 years, many existing refineries have expanded their capacities. As a result of capacity creep," whereby existing refineries create additional refining capacity from the same physical structure, capacity per operating refinery increased by 28% over the 1990 to 1998 period, for example. Overall, since the mid-1990s, U.S. refinery capacity has increased from 15.0 million bbl/d in 1994 to 16.9 million bbl/d in September 2004. Also in September 2004, utilization of operating capacity at U.S. refineries was averaging around 90%, down from 97% in July and August. Although financial, environmental, and legal considerations make it unlikely that new refineries will be built in the United States, expansion at existing refineries likely will increase total U.S. refining capacity in the long-run.

http://www.eia.doe.gov/emeu/cabs/usa.html#oil

and here

Petroleum Price and Allocation Decontrol in 1981

Description:
In early 1981, the U.S. Government responded to the oil crisis of 1978-1980 by removing price and allocation controls on the oil industry. For the first time since the early 1970s, market forces replaced regulatory programs and domestic crude oil prices were allowed to rise to a market-clearing level. Decontrol also set the stage for the relaxation of export restrictions on petroleum products.

Industry Action/Reaction:
Soon after deregulation, many small refineries and older, inefficient plants could no longer compete and were forced to shut down. Between the beginning of 1981 and 1985, the number of refineries operating in the United States declined by 101 to 223, and operable crude oil distillation capacity fell 3.0 million barrels per day to 15.7 million barrels per day.

The loss of so many small, low-conversion refineries, which were a large source of unfinished oils, sent many sophisticated refiners overseas for intermediate oil supplies. From 1980, the last full year of price and allocation controls, to 1981, imports of unfinished oils more than doubled, jumping from 55,000 barrels per day to 112,000 barrels per day. Unfinished oils imports continued to rise and in 1993, peaked at 491,000 barrels per day. In 2000, the United States imported an average of 274,000 barrels per day of unfinished oils.

With fewer refineries in operation, refinery utilization increased between 1981 and 1985 despite the lower overall level of refinery inputs over this period. Since 1985, distillation capacity has remained fairly stable and changes in refinery inputs, not distillation capacity, have been the primary cause of changing utilization rates.

Decontrol of crude oil prices allowed producers to raise prices to the market-clearing level for the first time since the early 1970s, and domestic crude oil prices became more closely aligned with foreign crude oil prices. The production sector responded by increasing crude oil exploration and production in the Lower 48 States during the first half of the 1980s. However, sharply falling oil prices in 1986 reversed this upward trend in domestic exploration and production.

Increases in Alaskan North Slope (ANS) production during this period aided the domestic crude oil situation. This helped to stem the flow of imported crude oil, greatly reducing U.S. reliance on OPEC crude oil. Imports remained low until crude oil prices collapsed in 1986.

Results:
After decontrol, residual fuel oil prices were allowed to rise to market clearing levels, and this accelerated fuel-switching and conservation at generating(25) and industrial facilities.(26) By 1985, demand for residual fuel oil of 1.2 million barrels per day was the lowest since the Second World War.(27)

Larger volumes of unfinished oils, motor gasoline, and distillate fuel oil began arriving from overseas and, by the mid-1980s, accounted for a larger share of imports than residual fuel oil. Imports of residual fuel continued to decline in the 1990s, and in 1995 fell to 187,000 barrels per day, their lowest level since 1948.

With the removal of export restrictions in late 1981, product exports began to expand, and the composition of these exports changed. Exports of all major light products increased markedly by the mid-1980. Moreover, these products, along with petroleum coke and lubricants, were being shipped to a greater variety of nations. Countries in Central and South America and the Far East, which received little or no U.S. exports in 1973, were now purchasing U.S. products on a regular basis.

http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/chronology/petroleumchronology2000.htm

Deregulation in the 80's appears to have wiped out significant capacity.

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