The U.S. refining industry faces a number of new policies that could force downward pressure on refinery numbers, capacity, or utilization:
Tighter Corporate Average Fuel Economy (CAFE) and vehicle greenhouse gas standards; the federal Renewable Fuel Standard (RFS); natural gas as a transportation fuel; and EPA Mandatory Greenhouse Gas Reporting. This report reviews the current production capacity of the refineries operating in the United States, and the sources and changes in their crude oil supply. Refining Capacity

After a volatile decade marked by record crude oil prices and profit margins, U.S. refiners now face the prospect of possibly long-term decreased demand for their products. A decade ago, 158 refineries operated in the United States and its territories. Despite permanent closures, operable refining capacity has increased over the past decade from 16.5 million barrels/day to approximately 18 million barrels/day. CRS count does not include refineries that primarily produce lubricating oils, or asphalt. The United States met roughly 39% of its crude oil demand in 2011 through domestic production ( Figure 8 ). This does not include natural gas needed in various refining processes, nor natural gas and petroleum condensates that are sold directly to retail markets (for example, propane and butane). In total, the United States meets 62% of its demand from crude oil produced in North America. Canada has become the United States' leading imported crude oil supplier through its increasing production from oil sands. Until quite recently, the diminishing supply of light sweet crude oil led U.S. refineries to make multi-million dollar investments in processing-upgrades to convert lower-priced heavier sour crude oils to high-value products such as gasoline, diesel, and jet fuel. Newly available light sweet crudes from the North Dakota's Bakken formation are changing refining dynamics in some regions of the United States. In the longer term, even with more rapid growth in income, the outlook for the gasoline demand in the United States will be constrained by changing attitudes toward petroleum usage, regulations to increase automobile fuel efficiency standards, and regulations mandating the expanded use of alternative fuels in motor transportation. Refinery Investment and Petroleum Product Imports

While imports of crude oil have been an important part of the U.S. energy supply picture for decades, the importance of petroleum product imports also rose before the recession and expansion of U.S. crude oil production. Recently motor-fuel demand has declined due both to economic factors and increased use of ethanol and other biofuels. These policies were intended, in part, to address the growing demand for refined petroleum products. Now, though, combined with the prospect of declining motor fuel demand overall, the use of more renewable fuels could influence operators to idle, consolidate, or permanently close refineries. In response to the Clean Air Act, refineries had to add processes that converted the H2S to elemental sulfur. Reformulated Gasoline .
A decade ago, 158 refineries operated in the United States and its territories and sporadic refinery outages led many policy makers to advocate new refinery construction. Fears that crude oil production was in decline also led to policies promoting alternative fuels and increased vehicle fuel efficiency. Since the summer 2008 peak in crude oil prices, however, the U.S. demand for refined petroleum products has declined, largely due to the economic recession, and the outlook for the petroleum refining industry in the United States has changed.
In response to weak demand for gasoline and other refined products, refinery operators have begun cutting back capacity, idling, and, in a few cases, permanently closing their refineries. By current count, 115 refineries now produce fuel in addition to 13 refineries that produce lubricating oils and asphalt. Even as the number of refineries has decreased, operable refining capacity has actually increased over the past decade, from 16.5 million barrels/day to over 18 million barrels/day. Cyclical economic factors aside, U.S. refiners now face the potential of long-term decreased demand for their products. Legislative and regulatory efforts that originally intended to address the growing demand for petroleum products may now displace some of that demand. These efforts include such policies as increasing the volume of ethanol in the gasoline supply, improving vehicle fuel efficiency, and encouraging the purchase of vehicles powered by natural gas or electricity.
The United States met roughly 39% of its crude oil demand in 2011 through domestic production, exclusive of the natural gas needed in various refining processes. Canada has become the United States' leading supplier of crude oil through its increasing production from oil sands providing roughly 15% of U.S. demand. In total, the United States meets 62% of its demand from crude oil produced in North America. Over the last few decades, imported crude oils have become heavier and higher in average sulfur content. Until quite recently, the diminishing supply of light sweet crude oil led U.S. refineries to make multi-million dollar investments in processing-upgrades to convert lower-priced heavier sour crude oils to high-value products such as gasoline, diesel, and jet fuel.
Some key environmental and energy policies enacted over the past few decades directly or indirectly affect the operations of U.S. refineries and the market for petroleum products. These include requirements for the use of reformulated gasoline (RFG) in many areas of the country, mandates under the federal Renewable Fuel Standard (RFS), increasingly stringent vehicle efficiency standards, and greenhouse gas limits under the Clean Air Act and state laws.
Declining motor-fuel demand spurred by both market and regulatory forces has influenced some refinery operators to idle, consolidate, or permanently close refineries. However, newly available light sweet crudes from North Dakota, Texas, and Ohio are changing refining economics in some regions of the United States.