Time to debunk another perpetual myth. In a story today in CNN – Big Oil’s Money Machine – consumer advocate Tyson Slocum makes the following claim:
“Are we getting any bang for our buck with record gas prices?,” asked Tyson Slocum, energy program director at Public Citizen, a national consumer advocacy organization. “They aren’t building any new refineries. If they’re not going to translate the high prices into investment for the consumer, why should they be allowed to charge high prices?”
What is it with these consumer advocates and not being able to get their facts straight? Here are the facts for Mr. Slocum. According to the Oil and Gas Journal (OGJ) the oil industry invested $176 billion in capital expenditures in 2006, and is forecast to invest $183 billion in 2007. Those aren’t small potatoes. So, would Tyson Slocum like to respond to that?
Furthermore, it is much cheaper to expand existing capacity than to build new refineries. The API recently estimated that it costs about 60 percent as much to expand existing capacity as to build new capacity. And refiners are definitely investing in expansions. In just the past 10 years, refinery capacity has expanded by 2 million barrels per day. That is the equivalent of adding 1 decent-sized refinery each and every year for 10 years. You can verify those numbers for yourself right here.
So, Tyson Slocum, given that new capacity is being built and major investments are being made – directly contradicting your claims – would you care to retract? Looks like something is being done with those “high prices” after all.