Saudi Arabia and Shell Expand U.S. Refinery

Maybe all those theories about Peak Oil, and about Saudi Arabia hiding the fact that it is tapped out, are wrong. The Saudis and Royal Dutch Shell are investing in the biggest expansion of U.S. refining capacity in 30 years, according to several reports today. The $7 billion project will expand a Texas refinery to such a degree that it's the equivalent of building a new gasoline refinery. The United States hasn't had one of those in three decades, and maintenance and outages at existing refineries has occasionally led to price spikes even when supplies of crude oil weren't particularly tight.

Peak Oil is the idea that the world has reached -- or will soon reach -- the point at which the supply of oil in the ground can no longer meet demand, as the easiest and cheapest to refine crude is pumped, leaving only harder to reach deposits that take longer and are more expensive to deliver to the market. But if Saudi Arabia -- the world's largest producer of oil whose tight-lipped stance about its own reserves has fueled speculation that it is reaching its own peak -- is investing in new refineries, does that mean it has plenty?

Does it mean it knows the crude that will be pumped will be harder to refine? Or does it mean nothing to the peak oil debate? We don't pretend to understand all the complexities of the oil market, or the speculation about peak oil, but when Saudi Arabia's oil company invests in a major U.S. refinery we know it's worth noting. The Daily Green is posting this news in hopes that its friends in the peak oil crowd can comment, and illuminate the import of this latest development.

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