The year was 1977, and the last major oil refinery to be built in the United States began operations in Garyville, Louisiana. While smaller refineries have opened since then, it has been almost 50 years since the last major U.S. oil refinery became operational. Now in 2026, a new refinery has been announced in Brownsville, Texas. It may signal a new strategy for American oil refineries.
On March 11, the Port of Brownsville held a major press conference. A new oil refinery will be built and operated on the Texas gulf, near the U.S./Mexican border. It will occupy about 240 acres. Port Director and CEO William Dietrich said, “This project strengthens the Port of Brownsville as a critical U.S. energy logistics hub and elevates the entire Rio Grande Valley on the national and international stage.” The mayor of Brownsville sent his congratulations to the Port of Brownsville, highlighting “business expansion and job growth” for people in South Texas.
The refinery, being constructed by America First Refining, is a commercial enterprise but touted by the Trump Administration. The refinery will operate in America and process shale oil that is mined in America. Shale oil is found in oil shale, a rock formation which when processed, can yield crude oil. The United States has these rock formations on coastlines as well as in the interior, including Colorado and Utah.
Since the 1990s, improvements in drilling technology have made shale oil easier to extract from geologic formations. The United States has so much shale oil that it accounts for about 60 percent of our proven crude oil reserves and 65 percent of our proven natural gas reserves. With this much crude oil inside our borders, why is the United States still an importer of crude oil from other countries? The answer is found in how our refineries are currently configured.
Oil refineries take in crude oil, and through a series of processes (including boiling and cooling), transforms them into products like gasoline or diesel fuel. However, a refinery can be further specialized to better process heavier crude oils with a higher sulfur content. This involves the construction and operation of additional hardware, which requires heavy capital investment. This is the path that many refineries in the United States took during the 1980s.
A report from the Energy Information Administration (EIA) shows that from 1980 to 1990, the number of simple oil refineries decreased from 157 to 71, a 45 percent reduction. In contrast, the number of heavy oil refineries decreased from 93 to 69 (a 26 percent reduction), while very complex refineries went from 69 to 65 (a mere 6 percent reduction) within the same period. According to the EIA report, unlike the simple refineries, “most of the large, fully-integrated refineries survived because they were either already equipped to process heavier oils or they had the capital to invest in hydrotreaters, hydrocrackers, and thermal cracking units to process these oils.” In that decade, the uncertainty of the future of lighter crude oil pressured many to shut down or adapt to new circumstances.
As a result of these investments, many American oil refineries mostly process heavier crude oil, including supply which is imported from other countries. The U.S. has lighter, sweeter oil reserves domestically, but our refineries are historically geared toward heavier sour crude. The rest of the world produces heavier crude. The natural result is trade.
The United States imports and exports oil to maximize efficiency. The National Petrochemical and Refiners Association (AFPM) communications reported last year that “Substituting it for U.S. light sweet crude oil would make these facilities less efficient and competitive, leading to a decline in fuel production and higher costs for consumers.” This does not have an impact on any remaining light oil refineries we have, nor is this burden mandatory for any new refineries that will be built in the future.
The construction and future operation of an American oil refinery that processes shale oil, which requires less complex machinery to turn into fuels, may signal a change to American oil refinery operations. All Americans should pay attention the long-term success or failure of this refinery. If it succeeds, it may usher in major changes to refineries nationwide. It may appear inconsequential at first, but the construction of the greenfield Brownsville oil refinery may have significant consequences for United States trade policy, energy infrastructure, the environment, and the nation’s standing in the international oil market for decades to come.
Written by Francisco Gutierrez, Public Policy Intern
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.