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Page added on August 30, 2006

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Giant oil refinery in India shows forces roiling industry

…While in the past, thinner profit margins required that refineries be close to consumers to save on shipping, today’s margins are wide enough that it pays to haul gasoline and other refined products long distances. Locating refineries in a region such as Asia is an easy decision, given its less-onerous construction costs, environmental limits and red tape, plus its own rapidly growing fuel demand.

The hefty profits have spurred many new projects. Scottish oil consultancy Wood MacKenzie counts 500 plans to expand or build refineries world-wide, and figures that maybe half will actually get done. Few are in the U.S. Despite considerable expansion and upgrading of existing American refineries, oil companies haven’t built a new refinery from scratch in the U.S. in 30 years.

The result is a growing dependence on foreign-produced fuel. Politicians of all stripes say the U.S. should rely less on foreign energy sources. Instead, it has twin addictions — not only to imported crude to feed its refineries, but to imported gasoline to meet demand beyond what those refineries can make.

The U.S. is importing about 13 percent of its gasoline needs this year, up from around 11 percent in 2005 and less than 8 percent in 2000, according to the U.S. Energy Information Administration. In all, American drivers use almost half of the gasoline burned in the world each day.

Wall St. Journal

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