American oil refineries shutter amid Biden's hostile fossil fuel policies, adding to pain at the pump: expert

US refinery capacity fell in 2021, the first decrease since 2017

LyondellBasell, the owner of one of the oldest refineries in Houston, became just one the latest refineries to close amid rising gas prices.

"These decisions are never easy, and we understand this has a very real impact on our refinery employees, their families, and the community," LyondellBasell interim CEO Ken Lane said in a statement over the weekend.

Oil refinery

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The closure is not limited only to LyondellBasell. Houston oil analyst Andy Lipow pointed out that other Gulf Coast refineries have faced the same fate.

"This is the third refinery on the Gulf Coast that is being shut in the last couple of years," Lipow told Fox 26. 

American refinery capacity has been on the decline in recent years, according to Fuels Market News latest Refinery Capacity Report. The report found that operable atmospheric crude oil distillation capacity in the U.S. fell from 19 million barrels per calendar day at the start of 2020 to 18.1 million at the start of 2021. It marked the first decrease in refinery capacity since 2017, the report noted.

Much of that dip in output can be blamed on refinery closures such as the one in Houston, with the report noting that five facilities shuttered during 2021, including the Shell refinery in Convent, Louisiana. Other states that saw a refinery closure include New Mexico, California, North Dakota, and Wyoming.

Citgo Lake Charles refinery

While some refinery closures have been blamed on pandemic market conditions that led to a decrease in demand for fuel, others believe the closures will only accelerate in the future.

Phil Flynn, a senior account executive/market analyst at the Price Futures Group and FOX Business contributor, warned that strict regulation under the Biden administration will continue to put pressure on refineries to stay in business.

"It wasn't too long ago the country was clamoring for the industry to buy and build new refineries because they couldn't keep up with demand," Flynn said Monday.

But government pressure to wean the country off of fossil fuels has made business difficult, with Flynn arguing that "refineries are getting squeezed out of business because of stricter regulations from the Biden administration and the pressure by the government" to "reduce demand for gasoline."

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Flynn believes the new reality "will impact prices Americans pay at the pump."

"The problem with this is that we're already seeing it impact people at the pump," Flynn said, adding such factors have "caused the run-up in the price of gasoline this summer."

Joe Biden

President Joe Biden (AP / AP Newsroom)

"It is also added to inflationary pressures," Flynn said. "Ultimately, the lack of refining capacity is going to be an issue and presents challenges for economic growth."

LyondellBasell said it has attempted to find a buyer for the facility, but the economic realities were that it could no longer wait to pull the plug. 

The 700-acres site can process 263,000 barrels of crude oil every day into fuels and petroleum products.

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Flynn warned that without a buyer for the facility, Americans can expect to feel the impact at the pump.

 "Hopefully somebody will step in and buy this refinery," Flynn said. "But if they don't, I would expect that it will add at least 5 to 10 cents a gallon over the long run for consumers."