In “Oil Industry Says Biofuel Push May Hurt at Pump,” JAD MOUAWAD of the New York Times (May 24, 2007) reports on recent testimony by oil industry executives who argue that the federal push for biofuels has delayed planned expansions of petroleum refining capacity and could worsen fuel shortages and pain at the pump.

President Bush in the State of the Union and legislation before Congress call for policies that effectively quintuple the current 7.5 billion gallon biofuel mandate. “That has forced many oil companies to reconsider or scale back their plans for constructing new refinery capacity,” Mouawad reports.

In congressional hearings last year, oil executives outlined plans to expand production capacity at existing refineries by 1.6 million to 1.8 million barrels per day over the next five years–an 10 percent increase.

“But those plans have since been scaled back to more than one million barrels a day, according to the Energy Information Administration, an arm of the federal government.”

Maoawad quotes Shell Oil Company prseident John Hofmeister: “If the national policy of the country is to push for dramatic increases in the biofuels industry, this is a disincentive for those making investment decisions on expanding capacity in oil products and refining. Industry-wide, this will have an impact.”

A report by Barclays Capital comes to the same conclusion. Uncertainty about biofuel requirements “is likely to deter and further delay investment, if not rule out many refinery investments completely.”