Lake Voice
Refineries must expand to meet demand
By St. Louis Post-Dispatch (MCT)
In late May, oil was selling on the international market for about $70 per barrel; the price of gasoline hit a record high of $3.23 per gallon. Today, oil is in the $90-per-barrel range -- but gasoline is about 50 cents cheaper than it was five months ago.
How can the price of gasoline go down when the cost of the stuff it's made from goes up? America's oil refining system. The plants that turn crude oil into a wide variety of refined petroleum products, especially gasoline, and the pipelines that serve them are running close to maximum capacity almost all the time. As a result, any disruption in the system -- a flood, a refinery fire, a mechanical breakdown -- can disrupt the gasoline supply, and up shoots the price of gas, no matter what's happening to the price of crude.
Assuming the resolution of significant environmental questions, consumers should be happy about what's going on in Wood River and Roxana. ConocoPhillips and Canada's Encana Corp. plan to spend $4 billion to expand the plant's refinery operations, increasing total capacity by about a third.
The expansion is being designed to accommodate the refining of oil extracted from oil sands in the province of Alberta in western Canada and piped to Illinois. Extracting oil sands becomes profitable when oil tops $35 per barrel; at today's prices, Canadian production is growing.
The Canadian oil flowing to Wood River is invulnerable to disruption by Middle Eastern extremists, South American demagogues or West African rebels. Because the Wood River facility makes gasoline for the St. Louis market, the region's supply should become more secure and better insulated from price spikes.
The project also will create 1,500 temporary construction jobs and add another 80 to 100 permanent jobs in a part of our region that has seen many good industrial jobs disappear.
Right now, America lacks serious, comprehensive conservation programs aimed at reducing gasoline use, and our refining capacity has fallen behind the rise in consumption. The nation now imports 11 percent of its gasoline supply, about double what it was 10 years ago. That makes us more vulnerable to problems abroad. In fact, a dock strike and other disruptions in Europe contributed to last spring's gasoline price spike.
Advanced pollution-control technology should make it possible to increase production without significant environmental damage. In 2005, for example, ConocoPhillips promised to cut 17,000 tons of toxic air pollution per year at its Metro East refineries. The agreement was as part of a $540 million national settlement with the federal government over pollution issues.
The company says the expanded refinery would emit less sulphur dioxide and other pollutants into the atmosphere than the facility does today, and Illinois' state Environmental Protection Agency has issued it a permit to proceed with its plans.
However, the American Bottom Conservancy, the Natural Resources Defense Council and other environmental groups have filed a federal appeal of that permit, arguing that the plant's planned air pollution controls won't be as effective as they could be.
America needs new refineries. An expanded Wood River refinery that includes the best available pollution-control technology would be a double win for our region.
To see more of the St. Louis Post-Dispatch, or to subscribe to the newspaper, go to http://www.stltoday.com
How can the price of gasoline go down when the cost of the stuff it's made from goes up? America's oil refining system. The plants that turn crude oil into a wide variety of refined petroleum products, especially gasoline, and the pipelines that serve them are running close to maximum capacity almost all the time. As a result, any disruption in the system -- a flood, a refinery fire, a mechanical breakdown -- can disrupt the gasoline supply, and up shoots the price of gas, no matter what's happening to the price of crude.
Assuming the resolution of significant environmental questions, consumers should be happy about what's going on in Wood River and Roxana. ConocoPhillips and Canada's Encana Corp. plan to spend $4 billion to expand the plant's refinery operations, increasing total capacity by about a third.
The expansion is being designed to accommodate the refining of oil extracted from oil sands in the province of Alberta in western Canada and piped to Illinois. Extracting oil sands becomes profitable when oil tops $35 per barrel; at today's prices, Canadian production is growing.
The Canadian oil flowing to Wood River is invulnerable to disruption by Middle Eastern extremists, South American demagogues or West African rebels. Because the Wood River facility makes gasoline for the St. Louis market, the region's supply should become more secure and better insulated from price spikes.
The project also will create 1,500 temporary construction jobs and add another 80 to 100 permanent jobs in a part of our region that has seen many good industrial jobs disappear.
Right now, America lacks serious, comprehensive conservation programs aimed at reducing gasoline use, and our refining capacity has fallen behind the rise in consumption. The nation now imports 11 percent of its gasoline supply, about double what it was 10 years ago. That makes us more vulnerable to problems abroad. In fact, a dock strike and other disruptions in Europe contributed to last spring's gasoline price spike.
Advanced pollution-control technology should make it possible to increase production without significant environmental damage. In 2005, for example, ConocoPhillips promised to cut 17,000 tons of toxic air pollution per year at its Metro East refineries. The agreement was as part of a $540 million national settlement with the federal government over pollution issues.
The company says the expanded refinery would emit less sulphur dioxide and other pollutants into the atmosphere than the facility does today, and Illinois' state Environmental Protection Agency has issued it a permit to proceed with its plans.
However, the American Bottom Conservancy, the Natural Resources Defense Council and other environmental groups have filed a federal appeal of that permit, arguing that the plant's planned air pollution controls won't be as effective as they could be.
America needs new refineries. An expanded Wood River refinery that includes the best available pollution-control technology would be a double win for our region.
To see more of the St. Louis Post-Dispatch, or to subscribe to the newspaper, go to http://www.stltoday.com
Copyright © 2010 -