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Opinion: Editorials

Examiner Editorial: Gas prices soar for lack of new refineries and pipelines

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Photo - A gas station in Escondido, Calif. (AP Photo)
A gas station in Escondido, Calif. (AP Photo)
Opinion,Editorial

In December of 2008, when then-Lawrence Berkeley National Laboratory Director Steven Chu told the Wall Street Journal that "we have to figure out how to boost the price of gasoline to the levels in Europe," the average gallon of gas cost about $1.75 in the United States and about $7.00 in Europe.

Today, less than four years into Chu's reign as President Obama's secretary of energy, Chu's home state of California is more than halfway to his stated goal. This week, the average gallon of gas is selling for $4.66 in California, according to the Energy Information Administration. The rest of the nation isn't too far behind at $3.85 a gallon.

In five of the last six years, the price of a gallon of gas decreased between July and October as Americans cut back on their vacation driving and winter gasoline blends were phased in at the pump. Gas prices dropped by an average of 27 cents over these months. But not this year. This year, the average price of a gallon of gas rose 46 cents between July and October. Why?

Part of the reason is that oil production on government lands has plummeted under Obama, falling by 14 percent in 2011 alone, according to Interior Department numbers. Obama never tires of pointing out that total domestic oil production is at an all-time high, but all the new production is taking place on private lands that are not subject to Obama's stringent permitting process or tortuous environmental regulation.

That may not seem significant, except that most of this new production is in areas that lack the needed refinery and transportation infrastructure that is currently located near our traditional public land sources. Without new pipelines and refineries better positioned to transport oil from private land to market, there will continue to be an oil bottleneck that drives up the price of gas at the pump, even as the price of oil falls.

The solution to this problem is to build new refineries and new pipelines, like the planned Keystone pipeline that would connect Canada's oil sand with existing oil refineries along the Gulf of Mexico. But of course, Obama and his environmental allies have blocked this and many other oil infrastructure projects.

There has not been a major new oil refinery built in the United States since the Marathon Garyville Refinery was built in Louisiana in 1977. True, our existing refinery capacity is higher today than it was 30 years ago, but all that refining is being done at 137 refineries today, versus 254 refineries 30 years ago.

Fewer refineries means more miles of pipe must be built and maintained, and it also means bigger problems whenever a key refinery goes down. That is exactly what happened this fall in California, when the Richmond Exxon refinery caught fire and the Kettleman-Los Medanos pipeline was contaminated. With two key delivery system points at reduced capacity, and without other refineries and pipelines to back them up, gas prices shot up almost a full dollar from $3.73 in the first week of July to $4.65 today.

In other words, Californians are now suffering at the pump because they have let their energy infrastructure become too fragile. Instead of developing the resources closest to them (including the more than 300 million barrels of oil sitting off of California's coast in the Pacific Ocean), California has chosen to become dependent on other states for its oil supply. And instead of building a diverse group of smaller refineries and shorter pipelines, California relies on a big dog that can suddenly take ill.

Americans will face a choice this November. They can go down the path California has chosen, a path of less oil development, fewer refineries and higher gas prices. Or they can let the market build a robust energy infrastructure that will create thousands of construction jobs now and keep energy prices low for decades. Depending on the choice they make, $7 gas could really be just four more years away.

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