Need to simplify permitting for new refinery construction: Bush

New York (Platts)--27Apr2005

President George W. Bush said Wednesday federal agencies will work with state
governments to spur the construction of new refineries where former military
bases once stood. "I will direct federal agencies to work with states to
encourage the building of new refineries on closed military bases, for
example, and to simplify the permitting process for such construction," Bush
said in a televised speech to the Small Business Administration. 

He provided no details about the proposal, which he mentioned only briefly
during remarks that covered familiar territory, particularly seeking ways to
reduce America's reliance on imported crude oil and refined products. Bush
noted no new refineries have been built in the US since 1976. Potential
builders have been given pause by the uncertain economics and cyclical nature
of the refining industry, as well as onerous permitting. "By easing the
regulatory burden, we can refine more gasoline for our citizens here at home.
That will help ensure supply and reduce dependence on foreign sources of
energy," Bush said.

The Bush refinery proposal comes two days after the Saudis pointedly noted in
Crawford, Texas, what OPEC as a whole has long bemoaned: that a shortage of
refining capacity in the US and resulting bottlenecks have contributed
mightily to the run-up in gasoline prices. While the failure of the US to
build new refineries in more than 30 years has been lamented by numerous
analysts, the fact remains that the US shut a significant amount of excess,
uneconomical capacity in the last 15 to 20 years. Any new refinery rolled out
during the 1980s and 1990s would have immediately run into weak refining
margins that have reversed themselves only in the last few years. And the one
plan for a new refinery that is on the boards -- in Yuma, Arizona, near the
fast-growing Phoenix market -- is the subject of significant skepticism that
it can be successful.

This story was originally published in Platts Global Alert
http://www.globalalert.platts.com

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