The Strait Is Their Problem

I do not know how to reopen the Strait of Hormuz. Neither does anyone shouting about it on television, which has not slowed anybody down.

The strait is real. Ships are not moving through it. The Red Sea, which is the way around, took missiles over the weekend along with a fuel tank at Riyadh airport. All of that is true, and all of it is four thousand miles away, and none of it is ours to fix this month.

Readers of this desk have heard the method. A swarm of drones is a spell until you ask where the warehouse is. A blockade is a headline until you ask what it actually stops, and then what we have that it does not touch.

The strait is their problem. Ours is a building — in Louisiana, or Illinois, or nowhere — and we have not put one up since 1977.

One plant, four states, five days

On 13 September a refinery at Channahon, Illinois lost power on a Sunday afternoon. By Friday diesel was up sixty-six cents in Michigan, fifty-two in Indiana, forty-seven in Illinois and thirty-five in Wisconsin, against sixteen cents on national gasoline.

That is not a story about Iran. That is a story about how little room the system has left.

In January 1990 this country ran 205 refineries. It now runs 130. Capacity is nonetheless higher than it was then, because every bit of the growth came from making the survivors bigger — the average American refinery has close to doubled in size. Fewer, bigger, and therefore brittle. Losing one plant used to be a regional inconvenience. Now it is four states.

And since 2020 even that has stopped covering the exits. Houston closed last March, Los Angeles in October, Benicia this spring. Los Angeles alone took five percent off the West Coast, which has almost no pipeline reaching it from the Gulf.

The last refinery of any size built new in this country broke ground in 1973. Ford was president when they poured the foundations.

The objection

I am a fence-sitter by temperament, and I have spent my life on the side of the argument that says government should not build what private capital will build. I have not changed my mind about that. The objection deserves a hearing.

It runs like this. If America needed another refinery, somebody would put one up, because there is money in it.

There is money in it. Margins have been fat for two years and diesel has just set the highest price in the history of the country. If that thesis were ever going to be tested, it is being tested now.

This year Marathon, Valero and ExxonMobil each reported capacity increases of under one percent, which the federal statisticians attribute to small process improvements rather than to expansion.

Under one percent. At record margins. In the year diesel crossed six dollars.

That is not a conspiracy and I will not pretend it is one. It is a rational firm behaving rationally. You do not commit ten billion dollars to a forty-year asset while half the political system has promised to legislate it worthless. Their caution is the predictable product of our own incoherence.

But notice what it does to the objection. The case against public construction is that private capital will handle it. Private capital is telling us, in its own filings, that it will not. The objection has stopped describing the world.

Then it takes ten years

That is the next thing said, and it was my own position as recently as this week. I am not going to take the decade apart in this column. I have more to say about it. Not here.

The reason one storm in Illinois moves the price of groceries in Ohio is that we have run a critical system with no slack for fifty years and then acted astonished every time it failed.

We are the most prosperous and productive country in the world. Is this really all we can do?

The strait will take years and it is not in our gift. The shed is in our gift. It has been the whole time.

— Julian B. Horrow