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Expert: Lack of oil refineries exposed

Gannett News Service

WASHINGTON — Consumer advocate Mark Cooper warned in a 2001 report that gas prices would soar above the $1.70 a gallon cost at the time unless U.S. oil companies increased refining capacity.

Four years later, with gas prices topping $3 a gallon, the research director at the Consumer Federation of America made the same argument at a House hearing Wednesday on energy.

“What we did in 2001 was we called for more refineries,” he said. “But nobody is doing anything systematically to fix it.”

Hurricane Katrina knocked out up to 20 percent of U.S. refining capacity last week, causing gas prices to rise by 46 cents a gallon and exposing a major weakness in the nation’s energy infrastructure.

Americans are paying about $3.1 billion more a week for gas than a year ago, an average of about $28 per household, according to Energy Department figures.

Consumer groups and some energy experts point to Katrina’s impact on energy costs as an example of why the government should press oil companies to build surplus refineries that can be called upon during emergencies.

In the long-debated energy bill that Congress passed this summer, just one item addressed refining capacity — a tax incentive for oil companies to build more facilities.

Some Gulf refineries have restarted in the past week, but the Energy Department reported Thursday that six large plants remain closed and another four are operating at limited capacity.

Despite a constant increase in demand, oil companies are processing less oil than they were nearly 25 years ago.

But refining capacity has grown some since the 1990s, said Bob Slaughter, who heads the refining association.

Expanding the number of refineries would take time, but companies could push more gallons of gasoline out of existing plants, he said.

“I think that companies will be adding capacity this year,” he said.

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