Another U.S. refinery is planning to close by 2024 and maybe earlier, joining six others that have already shuttered. The Houston refinery, which is operated by LyondellBasell industries, is slated to close at the end of 2023 due to the financial burden of upgrading its infrastructure and to advance its decarbonization goals pushed by the Biden administration. The U.S. refining industry has already lost 800,000 barrels of production over the last several years and this closure will add over 200,000 barrels per day to it. The previous refinery closures largely reflect the impact of reduced demand due to the COVID-19 lockdowns on the U.S. refining sector. In 2020, the pandemic contributed to a substantial decrease in demand for motor fuels and refined petroleum products, which put downward pressure on refinery margins and made market conditions more challenging for refinery operators.

Closure of the Houston refinery would increase the risk of fuel shortages in the United States and add pressure to fuel prices, which are already soaring due primarily to President Biden’s anti-oil and gas policies but exacerbated by Russia’s invasion of Ukraine. These refinery closures will leave the United States structurally short of refining capacity for the first time in decades. With about half the U.S. refining capacity located along the Gulf Coast, the United States will be particularly vulnerable if additional hurricanes should hit the Gulf Coast area.

Houston Refinery

The Houston refinery, which is among the top 25 largest-capacity facilities in the United States, could shut down earlier if an “equipment failure” spreads to major units. The refinery processes 268,000 barrels per day of oil and produces 92,600 barrels per day of diesel fuel, 89,000 barrels per day of gasoline and 44,500 barrels per day of jet fuel. Originally built by Sinclair Petroleum in 1918, the refinery has been owned by Atlantic Richfield (ARCO) and was operated jointly with Citgo until sold to the Netherlands-owned LyondellBasell in 2006. To close the plant, LyondellBasell is expecting charges, mostly consisting of $300 to $400 million for accelerated amortization of operating lease assets, $150 to $250 million for asset decommissioning, and around $200 million in other costs.

U.S. Refining Industry

The six refineries that shuttered in 2020 had a distillation capacity of 801,000 barrels of oil per day. In addition, five refineries with a capacity of 408,100 barrels of oil per day are idle—the largest number of idle refineries since 2012. In 2021, the U.S. refining industry had an operating capacity of 17.7 million barrels per day of oil and produced about 9.5 million barrels per day of gasoline, 4.7 million barrels per day of diesel fuel and 1.3 million barrels per day of jet fuel. This year, for the first time in history, China is expected to surpass the U.S. in refining capacity, reaching 18.8 million barrels per day.

What Can Be Expected

The continued decline in domestic refinery capacity could signal a long-term domestic fuel supply shortfall. Diesel fuel supplies have hit all-time lows on the East Coast and the U.S. stockpile has hit a nearly two-decade low. The nationwide stockpile of distillate fuel oil declined to about 104 million barrels in early May, the lowest level since April 2008. East Coast inventories declined to 20.97 million barrels of diesel at the end of May—about two weeks supply—the lowest level since data was first recorded in 1990. The average cost of diesel fuel is $5.775 a gallon—the highest level ever recorded. Diesel is vital for the construction, mining and agriculture sectors, and is central to our transportation and logistics systems. In 2020, the transportation industry alone consumed 122 million gallons of diesel per day.

Gasoline prices have hit multiple records in recent weeks. The U.S. average national gasoline price on June 14, 2022 was $5.016 a gallon—63 percent higher than a year ago and over double from when Biden took office.  While Biden likes to blame the high prices on the Russian invasion of Ukraine, the unused leases that the oil companies rent on federal land, and a myriad of other excuses, the truth of the matter is that he campaigned on ending oil and gas drilling and he and his administration are working toward that goal without regard to the American people and their needs. Besides that, he keeps promising American oil and gas to Europe in its time of need but does nothing to increase oil and gas production or infrastructure at home. Oil and gas exploration and production is expensive and no company is going to invest those funds if the policies from the Presidency are anti-oil and gas or if pipelines cannot be completed.

Goldman Sachs predicted that oil prices could hit $140 per barrel this summer, up from about $120 currently, as gasoline prices approach or exceed $5 a gallon throughout the United States. The situation could worsen because there are no plans to add significant refining capacity due to the severe regulations governing them. In fact, by the end of 2023, an additional 1.69 million barrels of U.S. refining capacity is expected to close—over 5 times as much as the Houston refinery.


The Biden administration has reportedly considered addressing the declining refining capacity by restarting idled refineries, but has yet to act on the issue. If his other actions are an example, Biden will do nothing since he and his administration want higher oil and gasoline prices to force Americans into electric vehicles that are increasing in cost due to a lack of minerals needed for their production and their batteries. During a time when inflation is sky-rocketing, asking the American people to purchase an electric vehicle that costs more than traditional vehicles and gets its fuel from an increasingly expensive and troubled grid makes no sense.

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