While America is making gains in the domestic production of solar panels, it is also increasing its domestic production of a more traditional energy source: petroleum. Over the past two years, confirmed in a recently released government report, the U.S. oil industry has increased its domestic refining capacity. 2023 saw a 2% increase in domestic refining capacity due to the completed expansion of the ExxonMobil refinery in Beaumont, Texas, as reported by the Energy Information Administration (EIA).
Although American oil refining capacity is not at its historic peak, which occurred in 2019 and was disrupted the following year by the COVID-19 pandemic shutdowns, 2024 saw an all-time low of idle capacity. The fact that no oil refinery capacity is sitting idle in the United States indicates a return to healthy production in the aftermath of COVID-19. The next step would be for major oil producers, such as ExxonMobil, Marathon, Valero, and Phillips, to invest in creating new refineries to expand long-term production capacity.
Oil Refinery Production Capacity Increased Over Last 2 Years
Last July, the EIA announced that oil refinery capacity had increased for the first time since the pandemic. Most of the expansion in 2023, as in 2024, came from expanding existing facilities rather than building new refineries. Fortunately for those in the petroleum industry, a brand-new refinery has been proposed for the first time in 50 years, highlighting the rarity of such valuable infrastructure. Element Fuels Holding, a Dallas-based company, is renewing its previous proposal to build a large refinery near Brownsville, Texas.
If approved and completed, the new plant would generate gasoline from naphtha feedstock. Backers are seeking private funds and government subsidies under the 2022 Inflation Reduction Act (IRA). A tangential benefit of the proposed refinery is that it would use byproduct hydrogen to generate clean electricity. Even though gasoline demand is predicted to decline after the 2030s due to the growing prevalence of electric vehicles (EVs), the refinery will be able to transition to producing other in-demand fuels, such as aviation fuel.
Resurging Capacity Increases Likelihood of Energy Independence
Increasing American oil refinery capacity helps move our nation down the path toward energy independence. Most policymakers want to reduce American reliance on energy imports, mostly oil, but many disagree on how to achieve this. Conservatives typically support increased petroleum production to reduce reliance on imported oil, especially from OPEC, while liberals typically support increased investment in alternative or clean fuels like solar power, hydrogen power, wind power, and hydroelectricity. Most American moderates support a combination of both options, with increased investment in clean energy but continued support for “tried-and-true” petroleum.
One option involving oil refining that will likely appeal to a broad spectrum of Americans is the ability to convert refineries from producing traditional gasoline and diesel to producing biofuels. Biofuel is a growing market that expanded 6% in 2023, but the U.S. faces a current lack of facilities to create biofuels. Using renewable crops to produce fuels has long-term clean prospects to increase our nation’s energy independence, benefiting both the environment and our domestic security.
