Horowitz: America’s oil refinery crisis as the bottleneck to energy freedom



A third-world country was traditionally regarded as an undeveloped nation, which, unlike its first-world counterpart, lacks the resources to foster a prosperous economy. What we are confronted with under the Biden administration, however, is the coming of a “fourth-world” dynamic, where prosperous Western countries endowed by God with tremendous reserves of natural resources shun, destroy, and obstruct their own resources and punish their people with self-inflicted poverty.

In case anyone still thought leftists were pained by the unprecedented energy inflation, Biden made it clear that he views the destruction of cheap and effective energy as a blessing. "My mother had an expression: Out of everything lousy, something good will happen,” Biden told reporters in Rehoboth Beach on Monday. “We have a chance to make a fundamental turn toward renewable energy, electric vehicles, and across the board."

In other words, the obstruction of our boundless God-given oil, gas, and coal resources is not a natural disaster, but a controlled demolition in order to make us reliant on unsafe and ineffective energy, just as they used (or induced) the pandemic to make us reliant on unsafe and ineffective medical products and treatment. They are hell-bent on doing to our economy and energy sector what they have long succeeded in doing to health care. Just know: It didn’t have to be this way.

Aside from the war on drilling, fracking, and pipelines, the left is ensuring that oil refineries become the key bottleneck of our energy freedom, in their regulatory morass that keeps all forms of fuel prohibitively expensive. You can’t have gasoline or jet fuel without growing capacity among oil refineries, yet we haven’t built a new large refinery since the 1970s. Worse, Chevron CEO Mike Wirth ominously warned that he believes there will never be another oil refinery built ever again.

"Capacity is added by de-bottlenecking existing units by investing in existing refineries," Wirth explained at a conference earlier this month. "But what we’ve seen over the last two years are shutdowns. We’ve seen refineries closed. We’ve seen units come down. We’ve seen refineries being repurposed to become bio refineries. And we live in a world where the policy, the stated policy of the U.S. government is to reduce demand for the products that refiners produce."

"At every level of the system, the policy of our government is to reduce demand, and so it’s very hard in a business where investments have a payout period of a decade or more," Wirth said. "And the stated policy of the government for a long time has been to reduce demand for your products."

In other words, the declining oil refining industry is a self-fulfilling prophecy. The more the global oligarchs demand an end to fossil fuels and institute policies facilitating that goal, both on the supply and demand sides, the more it becomes impossible to obtain the long-term financing to invest in critical infrastructure.

This comes at a time when we already have the existing refineries shutting down due to age and the inane pandemic shutdown. Two weeks ago, a large Houston oil refinery operated by LyondellBasell Industries announced it would shut down its operations at the end of next year, which means we are slated to lose 200,000 barrels a day. The U.S. already suffered the closure of six refineries due to the lockdown, which cost us 800,000 barrels a day. Rather than rapidly increasing our crude oil distillation capacity every month, as we were doing for years, we are now about 1 million barrels per day off the pre-pandemic peak. However, because of the demand-side policies, the regulatory schemes, the carbon footprint financing regulations, and the ethanol mandates on small independent refiners, we will likely never recover.

The Biden administration has become so friendly to the ethanol mafia that it is setting the renewable fuel standard prohibitively high. This forces refiners, who inevitably can’t blend that much ethanol into the national fuel supply, to purchase ransom credits from the EPA, known as renewable identification numbers (RINs). Thus, not only is the greater pull to ethanol diluting the fuel and raising the cost of corn and fertilizer – both commodities at record highs – it is exacerbating the financial instability of our nation’s fragile and aging refining capacity. And that is exactly what Biden would call a blessing in disguise.

Who stands to benefit? As always, it’s China. Even though the U.S. has larger oil reserves than China, God’s blessing can’t be utilized if there is a man-made curse on recovery, delivery, and refining. China’s capacity is expected to surpass the U.S. this year for the first time ever – topping out at 18.8 million barrels per day, roughly the level we attained pre-pandemic under Trump. Thus, the oligarchs running our country are committed to doing to oil what they did to our coal production: making China the champion of both.

Just as with so many other issues, we can’t wait until 2025 to deal with this emergency of vital goods. Energy-wealthy states must take the initiative to spawn an energy boom. States like Texas should create their own strategic reserves and should also invite energy companies to build oil refineries by circumventing the insane regulations at the federal level. Instead, the current Texas government is planning to indulge the green boondoggle and add more electric vehicle charging stations throughout the state to support up to 1 million electric vehicles. After T. Boone Pickens pushed his wind-farm boondoggle in many Texas counties last decade, they are now being inundated with solar farms while they have so much oil and gas under their feet.

A true red state would regulate energy the way the FDA regulates Pfizer. After all, if that standard is good enough for our bodies, it’s good enough for our cars.

Horowitz: Biden’s plan to alleviate fuel crisis? Dilute the fuel supply even more with corn needed for food



One could not have conjured up a more odious and counterproductive policy than taking 40% of our corn supply and using it to dilute our fuel, thereby increasing the cost of both food and gas. Yet not only has the Biden administration declined to repeal the ethanol mandate during this unprecedented period of inflation and supply shocks, he will increase ethanol use in a way that will further deplete gas mileage for many motorists and place a greater demand on corn, which is the antecedent to the entire chain of food costs, with prices approaching record highs,

Ever since the pathetic mandate was implemented in 2005 and expanded in 2007, oil refiners couldn’t meet the arbitrary sum of billions of gallons of biofuels to blend into the nation’s fuel supply, even if they wanted to. For 2022, the mandate stands at 36 billion gallons. It’s not safe for engines to have a fuel blend of more than 10% ethanol, but for years the corn lobby was suggesting, in a quite self-fulfilling way, that the way to meet the mandate is by allowing more flexibility to blend “E15” all year round with no restrictions from the Clean Air Act. The real solution, though, is to abolish the original mandate.

Ideally, we should offer “E0.” We should repeal the mandate, which will save independent refiners, alleviate the artificial demand on corn prices and land use, and enjoy more miles per gallon of unadulterated fuel. Instead, the Biden administration has chosen to allow gasoline that uses a 15% ethanol blend, which is typically banned during the summer, to be sold throughout this year. Liberal Republicans like Iowa Sen. Chuck Grassley always pointed to the right to choose and be free to sell E15, but he and the corn lobby forget that we should be free to choose zero ethanol, and oil refiners shouldn’t be forced to blend it into the mix. If Grassley and his lobbyists want ethanol, they are welcome to blend E99 with their own refineries and sell it to people who want it without government intervention.

At a time when we should be allowing people to purchase fuel that achieves more miles per gallon, we are inevitably creating greater demand on gas and food at the same time! According to the Department of Energy, “Vehicles will typically go 3% to 4% fewer miles per gallon on E10 and 4% to 5% fewer on E15 than on 100% gasoline.” So that will wipe out any gain in price from using ethanol, which, for once, is slightly cheaper than gasoline, but only because of the war on fossil fuels. Also, because of the corrosive nature of ethanol, a higher blend will inevitably force gas stations to retrofit their pumps with new fuel dispensers and new underground storage tanks. Guess who will pay for that? What about when all the car owners who are tricked into using E15 blow through their warranties and public clamor forces us to bail them out?

And speaking of car owners, as our government makes oil refiners blend more ethanol, another equally absurd and harmful mandate runs head-first into the ethanol mandate: namely, the Corporate Average Fuel Economy (CAFE) standards. In order to serve the gods of the climate and limit the use of fossil fuels, Congress dramatically expanded the CAFE standards in 2007, forcing auto manufacturers to make expensive cars with paper-thin steel in order to comply with the green energy agenda and increase their miles per gallon (mpg) from 27.5 to 35. This was part of Energy Independence and Security Act of 2007, the same bill that expanded the ethanol mandate, which would later run into problems with the CAFE standards. Just as with the ethanol mandate, the EPA has created a trading credit system in which manufacturers can buy credits from competitors in exchange for not complying with the standard. According to the Heritage Foundation, “a 1 mpg tightening of the standard would cost consumers $7.81 billion annually.”

Fast-forward to last month, and the Biden administration announced its intent to increase the standard to 49 mpg by 2026, essentially barring non-electric cars. So not only will this make cars too expensive for the non-latte-sipping crowd, but it will run into the renewable fuels standard, because there won’t be enough demand for fuel to even meet that standard.

Meanwhile, independent refiners continue to get hammered, as the EPA just denied all of the 36 petitions from small refiners to exempt them from the biofuels standard for the 2018 compliance year. This is done by design to ensure that we don’t create more oil refineries. One could not possibly have conjured up a worse confluence of policies to increase the cost of food, fuel, and cars and destroy jobs in the energy sector. Yet that is likely a feature, not a bug, of their plan. Fewer cars and more expensive food and fuel grease the skids for more dependence on government and less freedom.

Another peculiar thing about the E15 decision is that the reason why the EPA typically bans its sale in the summer under the Clean Air Act is over concern that the higher blend creates more smog. Isn’t it interesting how environmental regulations can be waived to please the corn engine gods, but no such waivers are issued for oil, gas, and coal permitting, the Keystone pipeline, interstate pipelines, transporting liquid natural gas by rail, or drilling in the Gulf of Mexico? In fact, just as the energy crisis was reaching its climax, the Securities and Exchange Commission (SEC), without the approval of Congress, issued a rule that will require all publicly traded companies to disclose the effects of their operations on “climate change.” This rule will make Dodd-Frank and Sarbanes-Oxley look easy and is designed to cripple the fossil fuels business.

Therefore, don’t be fooled by the recent band-aids placed on our energy ailment created by the Biden administration, such as the move to release more oil from the Strategic Petroleum Reserve. These are temporary political maneuvers to give the impression they are concerned about the consumer while they tighten the noose on fossil fuels, diminish our freedoms, and pay off their well-connected cronies. You might not be able to afford corn for your chickens, but you will have lots of it in the engines of your $50,000 compact cars.