House Republican unveils bill to boost US refinery capacity

Washington (Platts)--22Sep2005

US House Republican Policy Chairman John Shadegg, along with 32
cosponsors, Wednesday introduced legislation to address what he called the
"nation's critical shortage in refinery capacity" that was highlighted by
surging products prices following Hurricane Katrina.
     "There is no margin for error in our energy supply," Shadegg, an Arizona
Republican, said in a statement. "We were running at 97% capacity for refining
oil before Katrina hit. We have not built a new refinery in this country in 29
years. America desperately needs more refineries to convert crude oil into the
fuels that power our society." 
     The legislation, the Fuel Supply Improvement Act of 2005, seeks to
expedite and encourage construction of new and expanded refineries by
streamlining permitting processes and providing risk insurance similar to that
available to the nuclear energy industry to a limited number of new
refineries. 
     Hurricane Katrina shut down nine oil refineries as it roared into the
Gulf Coast in late August-early September, disrupting over 12% of the US'
refining capacity, Shadegg said. "That interruption in our ability to refine
crude oil -- not a shortage of crude oil itself -- was a significant driving
force behind the recent spike in gas prices. Now prices are rising again as
Hurricane Rita threatens the Gulf region."
     Hurricane Rita, now a category five storm, is headed toward the Texas
Gulf Coast, which holds the mother lode of US refining capacity. Some 17
refineries, representing 23% of the nation's refinery capacity are sited along
the coast, particularly in the region north of Houston and south to Corpus
Christi.
     US Senator John Kyl (Republican-Arizona) introduced similar legislation
last week to stimulate the construction of new refinery capacity. Kyl's bill
would increase the tax depreciation schedule for new refinery construction and
significant upgrades to existing facilities. 
(Cathy Landry, cathy_landry@platts.com)

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