President Donald Trump says he wants to reopen refineries that have been closed to give America a greater base to sell petroleum products to the world and make gasoline cheaper here at home.
In a message last week, he said he “would like to see refineries across the country reopen, especially the St. Croix refinery," which was shut down during the Biden administration during its ill-advised campaign to "transition" too quickly from fossil fuels to renewables, considered by some experts to be the greatest wealth transfer in US history.
The St. Croix facility is on an island in the Caribbean, part of the unincorporated US territory of the Virgin Islands.
President Trump has the right idea, though, because a lot more oil and natural gas are going to be needed over the coming years to get through, even if there is an energy transition, according to WKKR Company of West Texas CEO William Wallace.
Most of the oil refineries we have were built more than 40 years ago and are not equipped to use the shale frac oil now being drilled in West Texas, and that shows how far behind the US might be in world competition for diesel, gasoline, liquified natural gas and other crude oil products, he says.
"Those refineries were really built to handle the heavy crudes, we have to ship most of our light crude from the Permian Basin of West Texas to somewhere else to be refined."
Much of the oil refined 40 years ago was dark in color and heavy like tar, so refineries were equipped to handle it.
But the "fracking" shale revolution that started more than 20 years ago has been bringing up crude oil that looks kind of like apple juice, and it's not compatible with many of the Gulf Coast's facilities, so that has been mixed with dark oil or sold overseas.
It's the enormous paperwork and permitting process that can take years and millions of dollars that keep new refineries from springing up, and Mr. Wallace says the whole process needs to be streamlined because, since investors aren't willing to pay to get it done, no new refineries means ever-increasing prices for gas at the pump and other oil stuff.
"I think the oil business just sits here and sighs, hey, you got us handcuffed," Wallace notes.
Even the permitting of repairing of oil facilities is costly and time-consuming.
"So we can't build and we can't fix. What do you want us to do?"
And as a side note, the lack of investors in oil facilities will likely be a big problem in the future, too, because scarce investment money means less oil drilling for the future, causing the US to fall behind on its oil needs -- and fulfilling the need for oil is now considered a national security matter.
"At some point the war is going to be over, and we're not going to be out there drilling."