Trump refinery push unlikely to cut US gas prices, analysts say
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President Donald Trump is urging oil executives to build new US refineries to lower gasoline prices, but analysts say the effort will not bring near-term relief. No major refinery has been built in the US since 1977, and any new capacity would take years to come online. The push comes as global refining constraints, worsened by attacks on Russian and Middle Eastern facilities, keep fuel prices elevated.
Key Facts
- No new oil refinery with significant unit capacity has been built in the United States since 1977.
- The number of US oil refineries operating in 1982 was about twice as many as today.
- Russia, long a major exporter of refined fuel, is now a net importer due to fuel shortages at home.
- ExxonMobil CEO Darren Wood said the current pump prices are being set by supply and demand of refining products, not crude.
Refinery Construction Hurdles
President Donald Trump has called oil executives to the White House to push for reopening shuttered refineries, expanding existing capacity, and building new ones. White House spokesperson Taylor Rogers said Trump and his energy team will continue supporting such efforts to lower prices and strengthen national security. However, no new oil refinery with significant unit capacity has been built in America since 1977, and the number of operating refineries has roughly halved since 1982. Even if a building boom started immediately, it would take years to produce the gasoline and diesel needed to alleviate current prices.
Industry Reluctance
American oil companies are not rushing to build refineries despite being wildly profitable, because they view current energy market disruptions as temporary. John Auers, marketing director of refined fuels at Novi Labs, said the spike in gas prices triggered by wars in Iran and Ukraine will not last long enough to justify years of construction and multi-billion-dollar investment. Auers questioned what the Strait of Hormuz will look like in four to five years, assuming it will be reopened and Russian refineries will be back to normal by then.
Global Refining Constraints
Limited refining capacity worldwide, rather than just in the United States, is a major reason for the spike in fuel prices this year, even more so than the Iran war cutting off crude oil shipments in the Strait of Hormuz. ExxonMobil CEO Darren Wood said that in his 35 years in the refining business there had been excess refining supply, but now there is a refinery constraint. Refineries in the Middle East and Russia have been damaged by military attacks, and Russia, long a major exporter of refined fuel, is now a net importer due to fuel shortages at home. Even facilities still operating in the Persian Gulf cannot export as much product due to ongoing shipping disruptions.
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