Just one question on the building of new refineries

[ThomWV]

"We can not build new oil refineries because of excessive regulation; it is the EPA who has caused our shortfall in refining capacity" That's the party line from Washington.

Then someone tell me how we have managed to build all these new refineries for converting corn to ethanol without the EPA gumming up the works. They can build hundreds of new corn refineries, but not one new one for oil?

[endarkenment]

1. Perhaps it has more to do with new refineries being a poor investment?

If in fact we have reached something near peak oil it makes very little sense from an investment viewpoint to put a huge amount of capital into additional refining capacity.

[ThomWV]

6. As a poor investment they pale before a corn fed unit

It takes more energy to produce ethanol than is liberated by burning it and so its very difficult to immagine a worse investment than in a facility that makes more of it. Of course the difference is that I'm talking about it being a bad investment for the nation as a whole while you're talking about it being a good investment for those few who sink money into it and profit.

[endarkenment]

21. ethanol has buzz that attracts venture capital.

Mostly because there are enough unknowns to draw flies to shit. The oil industry is one of the most analyzed industries on the planet. If there was money to be made building new refineries, they, would get built.

I agree that ethanol, especially ethanol from food stocks like corn, is stupid from many angles.

[rurallib]

2. Along with that - didn't the oil companies buy up independent

refineries in the early '90s - refineries that were running fine under environmental rules - and shut them down? I seem to recall one large one in particular in southern California.

[Igel]

26. There was one.

But it wasn't shut down; it went to a different owner, eventually, a few months later.

That it was going to be shut made the news. That it wasn't shut wasn't news.

[underpants]

3. You and I both know this is BS. Refineries are their only spigot to control

From my journal

Don't Blame Prices On Environmentalists
Posted by underpants in Editorials & Other Articles
Tue May 30th 2006, 09:40 AM
Editor, Times-Dispatch: The oft-cited excuse for rising gas prices is the lack of new refineries in the U.S. This is echoed by people who should know better.
Blaming this on radical environmentalists is naive (sic). If the American Petroleum Institute wanted to initiate a lobbying effort to build a refinery in the middle of the James River, it would -- and it would get it, too. Big Oil doesn't bow to environmental pressures; in fact, it bows to no one, let alone the Sierra Club.

The important factor here is the companies' margin on refining and not over-investing in capacity; they are dealing with a finite supply, you know. There are currently half as many oil refineries in the U.S. as there were in 1981 but refining capacity has only decreased 10 percent. Google "Chevron memo refineries" and read for yourself (search for Texaco and Mobil memos, too). Big Oil has control over supply primarily through control of refining.

Oil companies enjoy the rare ability these days of price control and they apparently have willing followers to chant their message for them. Would you make a U-turn to get a $2.50 gallon of gas? Would you have a year ago?
http://journals.democraticunderground.com/underpants/45

[mrcheerful]

12. Have you researched where US domestic oil products go?

Or how much our government charges oil companies for the oil they pump out of public lands? Or the fact when Katrina shut down the refineries that not only did exports levels stay the same but the prices for that refined oil stayed the same while at the same time refined oil prices in the states went up? We are getting screwed big time.

[underpants]

16. Exactly it's not like the machines need a "mental day off"

I love that implication of this argument "THE REFINERIES ARE RUNNING AT 98% CAPACITY!!!" not only is regular maintenance already considered in that percentage what manager wouldn't KILL for things running 98% capacity? From an office manager to a fast food manager to the manager of a major industrial operation like this they would all DIE to find out how to get things to run at anywhere close to that level.

[newportdadde]

4. I think we all know if an oil company really wanted a refinery they would get it done.

It might take a few years to get their bought politicians in place, bribes done at the local level etc but eventually it would happen. They might get denied in one location here or there but if there was big money in it they would make it happen.

I can only conclude that they don't WANT to build one and why would they? Look at their profits, even with the price of crude increasing profits are through the roof. So at this time building a refinery does not help their pocket book, my gut tells me its because they know they won't need that much refining capacity because in the future they aren't going to have that much more crude available that will need refining.

[RB TexLa]

5. New refineries are not needed. Has there been any shortage of processed gasoline?

[ThomWV]

7. Actually, yes. And that is why we are importing finished gasoline from Europe

In europe they have excess refining capacity and we are buying finished gasoline from them. Didn't you know?

[RB TexLa]

8. So you feel it has to be refined in North America? Why?

[ThomWV]

14. Because the subjuct of this discussion is Our problem with refineries

You see, when I brought Our EPA into the discussion it excluded other countries from the discussion. The EPA has no authority over anyone but us. See what I mean? And when I refered to the building of refineries it was of necessity restriced to domestic capacity because, once again, we have no control over refineries being built anywhere else in the world. You see, its sort of about sticking to the subject.

[RB TexLa]

18. But if there is the refining capacity to provide adequately there isn't a need for new ones

doesn't matter where the current ones are located. If there were a need for them, they would be built.

You see, it's sort of like including us as part of the world.

[jayfish]

11. Seems Strange To Me

Increases in the price of gas have lagged increases in the price of oil. If the problem was refined product, wouldn't the inverse be true?

Jay

[ThomWV]

17. It certainly seems logical to me

Does seem strange doesn't it. Prices are rising becaue of supply and demand, but there is no lack of supply and with rising prices you'd think there would be a decrease in demand too. However in the face of all this we see gasoline being imported from a place where it sells for more (even considering the absurd taxes on fuels in europe) to a place where it sells for less and from a place where demand is not being satisfied (their prices are rising as fast as ours) to a place where it is?

Very difficult to explain indeed.

[seasat]

22. US refineries are operating at the lowest utilization rate since 1992.

According to the DOE US refineries are at 85% of capacity. They are not the bottle neck in gas supply now.

[mrcheerful]

9. Remember when big oil bought up all those independent refineries

after Reagan deregulated, they started closing all of them down using the EPA excuse, even after it was reported that some of those they were closing were up to EPA standards and the ones they chose to keep open were not. One thing about conservatives, they keep repeating the same lies and as a result you see the double talk, if your able to think on your own that is. Here in Michigan all oil products are refined in Indiana, so all gas in the state comes from that one refinery, yet 90% of the people in the state can't seem to grasp the fact that Speed Way gas is the same as Exxon gas or Shell or all the rest, its like these folks are conditioned to believe that Exxon gas is a better grade then Speed Way gas and that the gas is different. Thats why boycotts have no effect on gas stations. Same thinking behind this ideal drilling in the USA will lower cost. Most of the oil wells in the US are on public lands, the government only requires oil companies to pay around $19 a barrel for the oil taken off public lands, ( it could be higher then $19, that was the last price I found for oil taken from public lands )the problem is, outside of what the oil companies put into the strategic reserve, the rest is exported out of country at the current market price and is replaced by imported oil. So in other words we are being gouged not only by oil companies like Exxon but the government is also in on the gouging, then play the blame game which is blowing smoke up our asses and not one word how big oil, the auto industries and government are screwing the american citizens.

[seasat]

10. Interestingly, Reagan was responsible for most of the refineries closing.

There used to be a large amount of small refineries. They were kept operating by a subsidy that was rationalized that we need refinery capacity during war time. Reagan pushed for a a repeal of that subsidies and over a 100 small refineries shut down. There's a GAO report that outlines this. Another GAO report noted that the extra requirements passed under the Clinton administration on only added about 5% additional to the cost of a refinery. That's hardly a prohibitive amount as the report points out. The second reason that many refineries closed is, during the big consolidation of the oil companies, they found it more efficient to close the older refineries and expand the existing refineries. Refinery capacity is not, as others have pointed out, the reason for high fuel prices.

[spanone]

13. this is utter bullshit. in other words, dismantle the EPA.

why would the oil industry want to build something that is going to cost them money & profits? this is where an 'honest' gov.t would step in.

[mrcheerful]

15. Better yet lets regulate big oil instead of leaving them to watch themselves.

[ThomWV]

19. Far from it. The point is to stop letting the EPA be the scapegoat

Its the industry that is avoiding building capacity, not the EPA.

[NewJeffCT]

20. According to Olbermann last night

When the oil executives testified to Congress last year and asked if they wanted new refineries built, they answered "no"

Also, our current refineries are running at only 85% capacity as it is.

Also, a year or two back on DU, somebody posted memos from the oil companies about how they systemically shut down refineries over the years in order to drive up the price of oil & gas. I think there used to be 300 of them, now there are about 100, if I recall the numbers correctly.

[underpants]

23. Yeah

http://journals.democraticunderground.com/underpants/45


http://rawstory.com/news/2005/Group_Internal_memos_show_oil_companies_limited_refineries_to_drive_up__0907.html
The memos from Mobil, Chevron and Texaco show the following.

-- An internal 1996 memorandum from Mobil demonstrates the oil company's successful strategies to keep smaller refiner Powerine from reopening its California refinery. The document makes it clear that much of the hardships created by California's regulations governing refineries came at the urging of the major oil companies and not the environmental organizations blamed by the industry. The other alternative plan discussed in the event Powerine did open the refinery was "....buying all their avails and marketing it ourselves" to insure the lower price fuel didn't get into the market.

-- An internal Chevron memo states; "A senior energy analyst at the recent API convention warned that if the US petroleum industry doesn't reduce its refining capacity it will never see any substantial increase in refinery margins."

-- The Texaco memo disclosed how the industry believed in the mid-1990s that "the most critical factor facing the refining industry on the West Coast is the surplus of refining capacity, and the surplus gasoline production capacity. (The same situation exists for the entire U.S. refining industry.) Supply significantly exceeds demand year-round. This results in very poor refinery margins and very poor refinery financial results. Significant events need to occur to assist in reducing supplies and/or increasing the demand for gasoline. One example of a significant event would be the elimination of mandates for oxygenate addition to gasoline. Given a choice, oxygenate usage would go down, and gasoline supplies would go down accordingly. (Much effort is being exerted to see this happen in the Pacific Northwest.)" As a result of such pressure, Washington State eliminated the ethanol mandate - requiring greater quantities of refined supply to fill the gasoline volume occupied by ethanol.

[NewJeffCT]

24. Thanks

bookmarking your reply!

[4dsc]

25. WHY build new refineries??

Given that worldwide oil production is headed DOWNWARD, who is their right minds would want to build refineries?? Excect the Saudi's where the oil is and they are building a huge refinery that will put out much needed gasoline for the wasteful Americans..

[LSK]

27. I'd like to know how Bush can start an illegal war

But he cannot get a refinery built because of HIS EPA.

[Horse with no Name]

28. cause he is the decider and he decided he wanted a war

and didn't give a shit about a refinery?:shrug: