America closes refineries while the rest of the world races to build them

The core process technologies-hydrocracking, catalytic cracking, reforming-are licensed by only a handful of companies. Perhaps two or three dozen engineering, procurement and construction (EPC) contractors worldwide can deliver a large grassroots refinery. Heavy-wall reactors and large compressors come from a limited number of manufacturers, with long delivery times. The same contractors, compressor makers and commissioning teams are now needed to repair war-damaged refineries in the Gulf-competing directly with new projects in the developing world. And a refinery needs trained operators, maintenance crews and a regulatory system capable of overseeing it safely. The refinery technical talent cannot be imported overnight.

A refinery can be closed in months. Building one takes five to seven years or more.

Who will pay?

A large refinery costs billions of dollars. Nigeria's 650,000-barrel-per-day Dangote refinery cost roughly $20 billion.

At the very moment developing nations need this capital, multilateral lenders and many Western banks have stepped back from fossil fuel projects in the name of climate policy. Chinese contractors, meanwhile, arrive with state-backed financing and a construction team in a single package.

Whatever one thinks of the "debt trap" debate, the structure is clear: those who finance and build a nation's refineries gain lasting influence over its transportation fuel supply. Western climate finance policies have not reduced developing nations' need for refined products. They have only changed who builds the refineries.

Pollution moves; it does not disappear

Imported fuels must meet U.S. product specifications, and ships are subject to international limits on fuel sulfur, with stricter rules near North American coasts. But the emissions and safety standards at the refinery itself are set where the refinery stands-often far looser than in California.

Closing a tightly regulated California refinery and importing from one with weaker standards, then shipping the product thousands of miles, does not clean the air. It exports the emissions and adds the voyage.

A view from Asia

For Asia, conflict in the Gulf is not a distant event. It is paid for at the pump in Tokyo, Seoul, Mumbai and Manila, and in the price of every product that depends on refined crude oil. When the strait closes, Asian refineries run short, and the shortage travels on to California.

What the world needs is not another round of escalation but the restoration of free and stable navigation. America should remember that some 95 percent of the world's 8 billion people live outside its borders. It can end the policies that are forcing its own refineries to close, and help developing nations build theirs well – with technology, training, and financing.

Japan knows this work. For decades, Japanese engineering firms have built refineries, petrochemical complexes and gas plants across the Middle East, and trained the people who run them.

Crude oil is not useless; it is unfinished. Refining completes it. The nations that understand this are building refineries. The question is whether America, Japan and other partners will help them do it-or leave the job, and the influence, to others.