Oil refining refers to the purification of contaminants and separation of the many compounds found in crude oil. Since raw or unprocessed oil burns poorly and is generally not very useful, refining plays a vital element in the downstream segment of the energy sector. This is done by using fractional distillation, where crude oil is heated (the different compounds in crude oil boil at different temperatures), turned into gases, and then turned back into liquids once they cool below their boiling point.
See this link for more information on oil refineries:
The graph below represents the utilization of all crude oil distillation units, which is calculated by dividing refinery inputs (crude oil, unfinished oils, natural gas plant liquids put into oil distillation units) by the operable capacity of refineries.
You can see how the high demand for petroleum products led to refinery utilization well above 95% in the mid-late 1990's, leading to expansions in existing refineries. Utilization averaged about 90% up until 2005 when Hurricane Katrina struck.The recent financial crisis also hindered demand-illustrated by the large dip in refinery inputs and utilization in 2008. As of Sept. 30, 2011, U.S. refinery utilization is at 87.7%, still below historic levels.
There was a small increase in capacity in 2010 from the re-opening of PBF Energy's refinery in Delaware. It's also interesting to note that, although there are two new refineries in development, there hasn't been a new one in over 35 years.
Here's a link to an article about the two new refineries:
Notice how refinery utilization is generally higher in during the summer months. You can see how the 2008 crisis caused the steep decline in refinery utilization, contributing to a substantial decline in oil prices.
Weekly crude refining shows a visible upward trend over the last three decades. Again, the two most noticeable dips come from the hurricane and the financial crisis.