SAN FRANCISCO (MarketWatch) -- The domestic refining industry got a little smaller Friday.

For the second time in less than a month, a major U.S. independent petroleum refiner announced it is shuttering a plant. This time, it's Valero Energy Corp. VLO, -0.20% , and the facility is its 192,000 barrel-per-day plant in Delaware. Read about the Valero refinery shutdown.

Last month, it was Sunoco Inc., SUN, -1.89% , closing its Eagle Point refinery in nearby New Jersey.

There are solid economic reasons for the closures. Refining and marketing, the "downstream" end of the business, are under pressure. Crude prices have doubled from their lows of the year and fuel demand is down. That spells higher costs, weaker pricing and slimmer profit margins.

But whatever happened to the impassioned call for more domestic refineries? Can gasoline, diesel and heating-oil prices suddenly shrug off disruptions in the supply chain? Well, yes and no.

The latest hand-wringing over refinery capacity came in 2005, when Hurricane Katrina clobbered the Gulf Coast, triggering huge price spikes at the pump and sending profit margins to the moon for those refiners unscathed by the storm.

Meanwhile, biofuels, hybrid cars and a deep economic recession have cut into demand. Fuel inventories have risen steadily, especially in the Northeast, protecting consumers from any sudden kinks in the supply chain.

So what happens when the economy picks up again? By shutting existing facilities, is the industry sewing the seeds of the next price spike?

Possibly. Yet this is merely extending a trend that began developing decades ago. Rampant consolidation in the industry, efficiency of scale and ever-stricter emission standards demanded new technology and bigger investments, squeezing out most of the small regional refiners.

That doesn't mean capacity hasn't grown; it has. Between January 1993 and January 2009, operable U.S. refining capacity rose 17%, according to the federal Energy Information Administration. But it hasn't kept up with demand.

To close the gap, U.S. petroleum-product imports surged 93% over the same 16-year period, and are set to play an ever bigger role in satisfying Americans' thirst for fuel.

This isn't an obvious problem when demand is weak. But it's bound to backfire when the economy picks up, leaving independent refiners again at the mercy of rising oil prices and also of heightened competition from state-of-the-art refineries being built overseas, to serve the fast-growing energy markets of Asia and the Middle East.

That's where Big Oil is making its big "downstream" investments.

-- Jim Jelter, corporates editor