You are actually incorrect. Domestic refineries ARE being expanded.
Here's one "Marathon's estimated $3.2 billion Garyville, Louisiana, refinery expansion project will increase the crude oil refining capacity by 180,000 barrels per day. "
http://www.marathon.com/News/Features/Spotlight_Series/Garyville_Refinery_Expansion/
Another "Motiva Enterprises LLC today will officially break ground for its recently announced 325,000 barrel-per-day (b/d) refinery expansion in Port Arthur, Texas. "
http://www.motivaenterprises.com/home/Framework?siteId=motiva-en&FC2=/motiva-en/html/iwgen/motiva_media_center/press_releases/2007/zzz_lhn.html&FC3=/motiva-en/html/iwgen/motiva_media_center/press_releases/2007/par_groundbreaking_121007.html
Another "BP is investing $3.8 billion to upgrade and modernize our Whiting Refinery in northwest Indiana, in order to refine more heavy crude oil from Canada and to increase motor fuels production by about 1.7 million gallons each day."
http://whiting.bp.com/go/site/1550/
That's just a sampling of the expansion plans. I could find more, but I think my point has been made.
Here's one that is being built in India to double the refining capacity of that company.
http://www.reuters.com/article/tnBasicIndustries-SP/idUSBOM13421720071119
There are MANY more being expanded or built again, I could find more, but my point has been made.
It isn't a strategic blunder to build refineries overseas. It makes sense to do so. It makes more sense to import the finished product (gasoline/diesel) than it does to import the crude and refine it here.
As shown above this simple fact is incorrect. Oil production and proven resources is not keeping up with increasing world wide demand. Refining capacity is tight but it is not "seriously lacking".
The remaining shareholders are enriched and the person who sold the stock got the price he/she wanted for it. Sounds like a good deal all around.
Let's keep the emotional portion of this discussion out of it. It doesn't really add much to the discussion.