Energy Shortages and Inflation The New Norm as Refinery Closures Outpace Construction
By Ronald Stein
Editors’ Note: Progressives have played a coy game. As they over-regulate the energy business, denigrate the industry, have their allies in the environmental organization tie the industry up with lawsuits, and deny capital for expansion with their friends in the ESG movement; they grin like the proverbial Cheshire cat when energy costs soar far faster than the general rate of inflation. Grinning through their teeth they blame the industry, blame Putin, and blame us for wanting reasonably priced oil and gas. But you can’t shut down capacity as demand is expanding and expect lower prices. That defies all economic logic. Voters need to remember that this strangulation of energy is all part of the Progressive/Democrat plan to control your lives, make you more dependent on them, and reduce your standard of living. Some might say that is unfair on our part; it is the save the environment. If that were true, why would they permit capacity to be built elsewhere? Why are Chinese emissions better than ours? They aren’t and the earth can’t tell the difference. If anything, US energy corporations are more diligent in protecting the environment than most foreign operators. No, the energy crisis is contrived by Democrats for political control, not to save the earth. Further, it leaves us vulnerable to foreign producers, many of whom are bad actors. For a better economy, a better environment, and for national security, we need to get off the back of our domestic energy industry.
With worldwide refinery closures outpacing new construction, shortages and inflation are likely to be the new norm that inflicts regressive expenses upon those that can least afford it, as control of the worldwide refining industry shifts to Asia and Europe.
As the world has become impassioned with increasing its electricity generation from wind turbines and solar panels from breezes and sunshine, the world is silently slipping into a future of shortages and inflation as society’s demands for all the products and fuels manufactured from crude oil are exceeding the supply available from the dwindling number of refineries.
There were almost 700 oil refineries in the world as of January 2020, but as a result of continuous over regulations, permitting delays, aging equipment, and the worldwide support of the Environmental, Social, and Governance (ESG) to divest in fossil fuels, the right operating model and level of integration will be crucial for survival and sustained profitability of refineries.
In 2019 there were 135 refineries in the U.S. but five facilities were shuttered during the last two years.
Each refinery location is a business that needs to make business decisions. Consequently, one in five oil refineries is expected to cease operations over the next five years. One in five is 20 percent, or almost 140 refineries expected to be shuttered worldwide, resulting in a 20 percent decline in the products manufactured to meet the ever-increasing demands from society.
There are over 100 new refineries under construction, with most of them in Asia with 88, Europe with 12, and North America with 10. Asia is the region with the greatest number of future petroleum refineries. As of 2021, there were 88 new facilities in planning or under construction in Asia. By comparison, Europe is set to see an addition of 12 petroleum refineries, and North America is set to see an addition of 10. The amount of oil fed through refineries in Asia has significantly increased in the past three decades as demand for petroleum products surged in developing countries such as China and India. China is on track to succeed the United States as the country with the greatest oil refinery throughput.
While worldwide demand for the products made with oil derivatives and fuels manufactured at refineries continues to increase, the upcoming closures of manufacturers over the next five years will significantly reduce the supply of those items and place tremendous pressures on continuous shortages and inflation.
Renewables can only generate electricity, and intermittent electricity at best. The undisputable science is that renewables CANNOT manufacture any of the oil derivatives that are the basis of the thousands of products that are the foundation of societies and economies around the world. In fact, renewables cannot exist without crude oil as all the parts of wind turbines and solar panels are made with oil derivatives manufactured from crude oil.
Here is a reminder of what is manufactured from oil that did not exist before 1900 that is needed to support the growing demands of the world’s economy and for the health and well-being of the world’s eight billion residents:
Fuels for the:
- 50,000 heavy-weight and long-range merchant ships that are moving products throughout the world.
- 50,000 heavy-weight and long-range jets are used by commercial airlines, private usage, and the military.
- The 290 million registered vehicles in the U.S. as of 2021, were comprised of about 56 percent trucks, 40 percent cars, and 4 percent motorcycles.
- The cruise ships now move twenty-five million passengers around the world.
- The space program.
Oil derivatives to make thousands of products such as:
- Tires for the billions of vehicles.
- Asphalt for the millions of miles of roadways.
- Medications and medical equipment.
- Vaccines.
- Communications systems, including cell phones, computers, iPhones, and iPads.
- Water filtration systems.
- Sanitation systems.
- Fertilizers that come from natural gas help feed billions.
- Pesticides to control locusts and other pests.
- Wind turbines and solar panels are all made with products from fossil fuels.
With worldwide refinery closures outpacing new construction, shortages and inflation are likely to be the new norm that inflicts regressive expenses upon those that can least afford it.
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This article was published by CFACT, Committee for a Constructive Tomorrow and is reproduced with permission.
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