PDA

View Full Version : oh good .... oil industry finds another excuse not to increase refineries.


Mr. Laz
06-18-2007, 11:24 AM
Posted on Sun, Jun. 17, 2007
Industry curtails refinery projects

The decision by oil companies could mean higher gasoline prices well into the future.

By H. JOSEF HEBERT
The Associated Press

WASHINGTON | A push from Congress and the White House for huge increases in biofuels such as ethanol is prompting the oil industry to scale back its plans to expand refineries.

The move could keep gasoline prices high — possibly for years to come.

With President Bush calling for a 20 percent drop in gasoline use and the Senate debating legislation for huge increases in ethanol production, oil companies see growing uncertainty about future gasoline demand and little need to expand refineries or build new ones.

Oil industry executives no longer think there will be the demand for gasoline over the next decade to warrant the billions of dollars in refinery expansions — as much as a 10 percent increase in new refining capacity — they anticipated as recently as a year ago.

Biofuels such as ethanol and efforts to get automakers to build more fuel-efficient cars and sport utility vehicles have been portrayed as key to countering high gasoline prices, but they are likely to do little to curb costs at the pump today, or in the years ahead as refiners reduce gasoline production.

Politicians frequently have blamed a shortage of refineries for the sharp price spikes in gasoline. Sen. James Inhofe, an Oklahoma Republican, did so last week during debate on a Senate energy bill.

“The fact is that Americans are paying more at the pump because we do not have the domestic capacity to refine the fuels consumers demand,” Inhofe said as he tried unsuccessfully to get into the bill a proposal to ease environmental rules for refineries and streamline the process of obtaining permits for them.

This spring, refiners, which were hampered by power outages, could not keep up with demand and imports were down because of greater fuel demand in Europe and elsewhere.

Despite stable — even sometimes declining — oil prices, gasoline prices soared to record levels and remain well above $3 a gallon.

Consumer advocates maintain that the oil industry likes it that way.

“By creating a situation of extremely tight supply, the oil companies gain control over price at the wholesale level,” said Mark Cooper of the Consumer Federation of America.

Cooper said that a wave of mergers in recent years has created a refining industry that “has no interest in creating spare (refining) capacity.”

Only last year, the U.S. Energy Department was told that refiners — which are reaping big profits and anticipating growing demand — were looking at increasing their refining capacities by more than 1.6 million barrels a day, about a 10 percent increase. That would be enough to produce an additional 37 million gallons of gasoline daily.

But oil companies already have scaled back those expansion plans by nearly 40 percent. Industry and government officials say more cancellations are expected if Congress passes legislation now before the Senate that calls for 15 billion gallons of ethanol use annually by 2015 and more than double that by 2022.

“These (expansion) decisions are being revisited in boardrooms across the refining sector,” said Charlie Drevna, the executive vice president of the National Petrochemical and Refiners Association.

With the anticipated growth in biofuels, “you’re getting down to needing little or no additional gasoline production” above what is being made today, said Joanne Shore, an analyst for the government’s Energy Information Administration.

In 2006, U.S. motorists used 143 billion gallons of gasoline, of which 136 billion was produced by American refineries.


Drevna, the industry lobbyist, said that annual demand had been expected to grow to about 161 billion gallons by 2017. But Bush’s call to cut gasoline demand by 20 percent — through a combination of ethanol and improvements in vehicles’ fuel efficiency — would reduce that demand below what U.S. refineries make today, he said.

“We will end up exporting gasoline,” Drevna said.

Asked recently whether his company might build a new refinery, Chevron Corp. Vice Chairman Peter Robertson replied, “Why would I invest in a refinery when you’re trying to make 20 percent of the gasoline supply ethanol?”

Valero Corp. is the nation’s largest refiner, producing 3.3 million barrels a day of petroleum product. Recently the company increased production capacity at its Port Arthur, Texas, refinery by 325,000 barrels a day.

But Valero spokesman Bill Day said some additional expansions have been postponed.

“That’s not to say we’ve changed our plans,” Day said.

“But it’s fair to say we’re taking a closer look at what the president is saying and what Congress is saying” about biofuels.

Day said there was a “mixed message” coming out of Washington, calling for more production but also for reducing gasoline demand.

“It’s something that we have to study pretty carefully,” he said.

Ron Lamberty of the American Coalition for Ethanol said all the talk about biofuels threatening gasoline production is the “latest attempt to blame ethanol on Big Oil’s failure to meet our energy needs.”

“The ethanol industry continues to grow while oil refiners continue to make excuses for maintaining their profitable status quo,” said Lamberty.

Sen. Byron Dorgan, a North Dakota Democrat, said consolidation of the oil industry into fewer companies has left them with no incentive to expand refineries.

“It’s a perverted system that does not act as a free market system would act,” Dorgan said. “If you narrow the neck of refining, you actually provide a greater boost to prices, which is a greater boost to profitability.”

Richard Blumenthal, the attorney general of Connecticut, wants Congress to require refiners to maintain a supply cushion in case of unexpected outages.

Blumenthal said at a recent hearing that refiners in the 1980s were producing at 77.6 percent of their capacity, “which allowed for easy increases in production to address shortages. In the 1990s, as the industry closed refineries … (that figure) rose to 91.4 percent, leaving little room for expansion to cover supply shortfalls.”

http://www.kansascity.com/105/story/154653.html

BigChiefFan
06-18-2007, 11:29 AM
We pay the salary to everyone of these ****ing politians and they don't do a dman thing to help help out the average family. It's more price gouging and pillaging from the land of the free. Our government is a sham. Quit taking my tax money and let me solve my own problems.

Mr. Laz
06-18-2007, 11:51 AM
it doesn't matter ...... the oil industry is gonna bleed us for every cent they can.


"America is using too much gas .....so prices have to go up because of demand"

"American is trying to take measures to reduce the amount of gas it uses, no new refineries ...... so prices have to go up"

"war in middle east is scaring us ..... gas prices have to go up"

"i just sneezed really hard .... gas prices have to go up"

BucEyedPea
06-18-2007, 11:53 AM
This is exactly why congress shouldn't interfere in the market. Ethanol makes no economic sense and will just use up more land. It's also more expensive. Besides why increase production of what you've got when the govt is creating a competitor for you. Can't say I blame them if there's lesser demand for the oil.There's less market for them now.

Mr. Laz
06-18-2007, 12:00 PM
This is exactly why congress shouldn't interfere in the market. Ethanol makes no economic sense and will just use up more land. It's also more expensive. Besides why increase production of what you've got when the govt is creating a competitor for you. Can't say I blame them if there's lesser demand for the oil.There's less market for them now.
and how exactly are we gonna create lesser demand for a necessity of modern society.

government has to get involved in this situation ...... they just choose the wrong way to do so. Ethanol is a stopgap method AT BEST ... and we need to stop dumping money down that black hole.

imo ... 3 things are viable, none include ethanol

1. conservation
2. biofuels that use 'leftover' products for a stopgap method
3. hydrogen

Cochise
06-18-2007, 12:01 PM
This is exactly why congress shouldn't interfere in the market. Ethanol makes no economic sense and will just use up more land. It's also more expensive. Besides why increase production of what you've got when the govt is creating a competitor for you. Can't say I blame them if there's lesser demand for the oil.There's less market for them now.

It's not a net energy saver either.

Sure, people love it - the people who are getting the lucrative government subsidies, the people who just want to stick it to the oil companies - but it's not a real solution. It's a waste of money, in my opinon.

Instead of subsidizing all this ethanol business, we ought to be pouring the money into fuel cell research and such.

People say that fuel cells are 10 years away from being in affordable cars - well, why wouldn't we direct research funding toward those, the permanent solution, instead of this temporary one? God forbid the government have a forward looking energy policy for once, instead of this hand-to-mouth corn boondoggle.

Saulbadguy
06-18-2007, 12:05 PM
Why don't we have electric cars available to us?

BucEyedPea
06-18-2007, 12:06 PM
and how exactly are we gonna create lesser demand for a necessity of modern society.

government has to get involved in this situation ...... they just choose the wrong way to do so. Ethanol is a stopgap method AT BEST ... and we need to stop dumping money down that black hole.

imo ... 3 things are viable, none include ethanol

1. conservation
2. biofuels that use 'leftover' products for a stopgap method
3. hydrogen
Government needs to keep it's hands off, including not starting wars with oil producing nations....then if and when the prices become too much for the market to bear there will be incentive for other alternatives as it will be worth it then. In the meantime high prices will lead to natural conservation without the govt stepping in. It's like gravity...a natural law.

Guru
06-18-2007, 12:08 PM
Donger in 3..... 2..... 1.....

BucEyedPea
06-18-2007, 12:09 PM
Why don't we have electric cars available to us?
They are I believe. Just not well liked yet.

California has already set a hydrogen highway bill into effect for hydrogen cars too which have been in development. The internal combustion engine went through several reworks or variations before the final one came into being. Give it time. It's not that far off. And prices may just come down again unexpectedly. They've gone up and down over time.

Saulbadguy
06-18-2007, 12:10 PM
They are I believe. Just not well liked yet.

California has already set a hydrogen highway bill into effect for hydrogen cars too which have been in development. The internal combustion engine went through several reworks or variations before the final one came into being. Give it time. It's not that far off. And prices may just come down again unexpectedly. They've gone up and down over time.
They aren't available. I can't go out and buy one.

RJ
06-18-2007, 12:14 PM
....then if and when the prices become too much for the market to bear there will be incentive for other alternatives as it will be worth it then. In the meantime high prices will lead to natural conservation without the govt stepping in. It's like gravity...a natural law.



I disagree with that part of your post. The oil companies like things just they way they are today. As long as they can keep gas prices at a level where we'll bitch a lot but not buy any less product they'll continue to rake in record profits. Barring natural disaster or catastrophic war I'm betting we see prices remain in the $3.50 per gallon range, give or take a little.

BCD
06-18-2007, 12:20 PM
They aren't available. I can't go out and buy one.http://www.electriccars.com/main.cfm

BucEyedPea
06-18-2007, 12:21 PM
They aren't available. I can't go out and buy one.
Psst! Detroit had some in 1918. In fact by 1900 they outsold other versions; gas and steam.

History of Eelctric Vehicles (http://inventors.about.com/library/weekly/aacarselectrica.htm)

Think Ralph Nader asked who killed the EV.

Now

Top Ten Electric Cars (http://www.autobloggreen.com/2007/02/07/the-top-ten-electric-vehicles-you-can-buy-today-for-the-most-pa/) you can buy right now.

More...
http://www.treehugger.com/files/2006/07/what_electric_c.php

Pitt Gorilla
06-18-2007, 12:22 PM
Why don't we have electric cars available to us?Electric cars will be here in 08. The Mercedes/Chrysler Smart car will have an all electric option. I have a friend in Australia who has the regular Smart car and it's pretty pimp.

Mr. Laz
06-18-2007, 12:23 PM
I disagree with that part of your post. The oil companies like things just they way they are today. As long as they can keep gas prices at a level where we'll bitch a lot but not buy any less product they'll continue to rake in record profits. Barring natural disaster or catastrophic war I'm betting we see prices remain in the $3.50 per gallon range, give or take a little.
it's because it's not a "luxury" item


Food,Medical and Energy are ripe for abuse



Food is muted because of all the varied types of food available

medical is totally screwed up

Energy is often regulated for a reason


not to mention the impact importing fossil fuels have on our national security.

unlurking
06-18-2007, 12:23 PM
They aren't available. I can't go out and buy one.
Yes you can (there are others out there, but this is my favorite), but you may have to wait a little while for delivery...

www.teslamotors.com

Just expect to pay almost $100,000 for it until mass production enables a price drop. They are supposed to be working on a 4 door sedan model with closer to 500 mile range for '08 if I remember right. I honestly believe that if someone dumped money into this company and enabled mass production, they'd start flying off the shelf. I know I'd buy one.

Personally, I think electric cars are the way to go. This would likely require improved grid infrastructure and nuclear plant, but I'm all for it.

BucEyedPea
06-18-2007, 12:23 PM
I disagree with that part of your post. The oil companies like things just they way they are today. As long as they can keep gas prices at a level where we'll bitch a lot but not buy any less product they'll continue to rake in record profits. Barring natural disaster or catastrophic war I'm betting we see prices remain in the $3.50 per gallon range, give or take a little.
I disagree. You can't tell the future. Gas prices dropped in the 1980's because the oil producing nations saw: conservation, better mileage cars etc. I had a chart of gas prices through time that bear this out.

Cochise
06-18-2007, 12:29 PM
I disagree. You can't tell the future. Gas prices dropped in the 1980's because the oil producing nations saw: conservation, better mileage cars etc. I had a chart of gas prices through time that bear this out.

Consumption went up and up and up through the three decades leading up to the oil crisis in the 1970s. The smaller vehicles of the 1980s and 90s were a reaction to that. Then vehicles started to become bigger and bigger and bigger again after the advent of the Explorer and on into the early 2000s. What we are seeing now is another reaction to that.

It all seems pretty simple to me. The difference is that in the 70s, you couldn't even get gas. At least now we can get it whenever we want, it's just more expensive.

I'll take expensive over unavailable any day of the week. And I think prices were still higher in the 70s when you adjust for inflation than they are today.

Hydrae
06-18-2007, 12:29 PM
Yes you can (there are others out there, but this is my favorite), but you may have to wait a little while for delivery...

www.teslamotors.com

Just expect to pay almost $100,000 for it until mass production enables a price drop. They are supposed to be working on a 4 door sedan model with closer to 500 mile range for '08 if I remember right. I honestly believe that if someone dumped money into this company and enabled mass production, they'd start flying off the shelf. I know I'd buy one.

Personally, I think electric cars are the way to go. This would likely require improved grid infrastructure and nuclear plant, but I'm all for it.


That's a sweet looking car. And it claims 200 miles on a charge which is great! Sounds like they have found some kind of breakthrough with their batteries. That is the only area slowing electric car production down, the need for more efficient battery systems.

ChiefsFanInIndy
06-18-2007, 12:33 PM
Why in all this bitching and moaning is no one mentioning conservation? Use less of any product and that product's price comes down.

So many people say who should do what, and blah blah blah. Then you go out to your driveway, fire up the SUV, and drive to the store to get a carton of milk.

Problem is conservation requires sacrifice and we have evolved into a society of selfishness and entitlement.

So drive less or pay it and shut up about it.

Mr. Laz
06-18-2007, 12:37 PM
Why in all this bitching and moaning is no one mentioning conservation?
1. conservation
2. biofuels that use 'leftover' products for a stopgap method
3. hydrogen
go **** yourself

ChiTown
06-18-2007, 12:40 PM
go **** yourself

The only current, viable alternative on that list is conservation. The other two have no commercial viability (as of now).

Mr. Laz
06-18-2007, 12:49 PM
The only current, viable alternative on that list is conservation. The other two have no commercial viability (as of now).
which is why the government needs to get involved in this particular issue.

by the time the natural process of the market gets around to it the damage will by far worse than we need.


1. environmental - whether you believe in global warming or not it's terrible for the environment and therefore our health in general.

2. Terrorism - imo the best way to stop it is to cut the supply of money. Most of that comes from oil producing countries.

morphius
06-18-2007, 12:54 PM
That's a sweet looking car. And it claims 200 miles on a charge which is great! Sounds like they have found some kind of breakthrough with their batteries. That is the only area slowing electric car production down, the need for more efficient battery systems.
That isn't the only thing. The auto industry doesn't seem to like battery powered cars at all, being that shortly after California dropped their rules on zero emission cars they all collected them up and crushed them. I guess there are not enough parts that can go wrong and need servicing on.

htismaqe
06-18-2007, 01:10 PM
which is why the government needs to get involved in this particular issue.

That's the problem, and it says so in your article.

The government IS involved. They're pushing renewable fuels and conservation. Iowa is going to spend BILLIONS of dollars on soy and corn-based alternative fuels over the next 5 years.

And the net result is that it's going to drive down demand for gasoline. As the demand goes down, the supply on-hand goes up, easing pressure on existing production facilities.

Unless, of course, your suggesting that the government step in and DEMAND that they up production...

morphius
06-18-2007, 01:52 PM
Unless, of course, your suggesting that the government step in and DEMAND that they up production...

As vital as it is to our national economy, I see very little issue with the government telling them that have to increase refinery capacity.

BucEyedPea
06-18-2007, 01:56 PM
Consumption went up and up and up through the three decades leading up to the oil crisis in the 1970s. The smaller vehicles of the 1980s and 90s were a reaction to that. Then vehicles started to become bigger and bigger and bigger again after the advent of the Explorer and on into the early 2000s. What we are seeing now is another reaction to that.

It all seems pretty simple to me. The difference is that in the 70s, you couldn't even get gas. At least now we can get it whenever we want, it's just more expensive.

I'll take expensive over unavailable any day of the week. And I think prices were still higher in the 70s when you adjust for inflation than they are today.
My sources say they're lower when adjusted for inflation....that is actual prices not taxes on it. Whatever...I had to leave my puter and couldn't find that graph in time. I still couldnt' find it...but this one's close. It's a trend of oil prices. It highlights our foreign policy or geopolitical effects with the red more than any economic policy. But the same site mentions the skyrocketing tariffs added under Bill Clinton in another article which I'll post separatly.


http://www.mises.org/images4/oilprices.jpg

SOURCES: Federal Reserve Bank of St. Louis, and Bureau of Labor Statistics.

Thus, if we exclude the spikes caused by geopolitical events, real oil prices have followed a downward trend from the mid-1970s until the late 1990s.-- Oil Price Mirage (http://www.mises.org/story/1892)

Forecasting is risky by anyone with regards to the future though.
History of the oil industry is loaded with exaggerated demand forecasts, pessimistic supply limitations and sky-high prices.

BucEyedPea
06-18-2007, 01:59 PM
Now for the tax angle:
If anyone owes us answers it's the govt. Unfortunately our politicians and bureaucrats are economically ignorant. They're projecting the gouging allegation to big oil when they tax gouge at the same time.

So why is the price of gas so high?
There is one other factor that is rarely mentioned as a major cause of high gas prices-the government. Politicians rarely mention the taxes that they impose on gas or the costs of environmental legislation so dear to their hearts (especially the Goreites). The federal punishment for driving in 1980 was 4 cents a gallon. As of 1993, under the Clinton regime, the gas tax reached 18.3 cents per gallon. Tack on state and local penalties for operating your vehicle and you face taxes of 40 to 50 cents per gallon. Add to taxes the costs of environmental restrictions and restrictions on imported oil and you have the makings of an artificially inflated price.

RJ
06-18-2007, 02:02 PM
Why in all this bitching and moaning is no one mentioning conservation? Use less of any product and that product's price comes down.

So many people say who should do what, and blah blah blah. Then you go out to your driveway, fire up the SUV, and drive to the store to get a carton of milk.

Problem is conservation requires sacrifice and we have evolved into a society of selfishness and entitlement.

So drive less or pay it and shut up about it.




All of which makes perfect sense......except that the point of the thread is that ethanol use (I assume creating les gas use) is going to prevent prices from dropping.

So if we use less gas the oil companies won't be able to build new refineries. But if we continue our current use prices remain high because of demand.

Hmmmmmm..... :hmmm:

Mr. Laz
06-18-2007, 02:02 PM
As vital as it is to our national economy, I see very little issue with the government telling them that have to increase refinery capacity.
I want the government to help orchestrate them going out of business.

or at least reduce their business by 80% so that all our oil needs are supplied domestically.

htismaqe
06-18-2007, 02:11 PM
I want the government to help orchestrate them going out of business.

or at least reduce their business by 80% so that all our oil needs are supplied domestically.

Then be prepared to get thoroughly screwed in the short term. I won't go any further than that.

Simplex3
06-18-2007, 03:10 PM
They aren't available. I can't go out and buy one.
http://www.teslamotors.com/index.php

Simplex3
06-18-2007, 03:11 PM
I disagree with that part of your post. The oil companies like things just they way they are today.
Yes, they're thrilled to DEATH with 10% margins.

RJ
06-18-2007, 03:15 PM
Yes, they're thrilled to DEATH with 10% margins.


They like their 10% margin much better at $70 a barrell than they do at $40 a barrell, or so I'd suppose.

If Donger is correct, that 10% has been consistent for many years. If so, seems to me higher prices would be fine with the oil companies as long as consumption doesn't drop.

Simplex3
06-18-2007, 03:19 PM
Well, this will be my last post in a gas thread. After reading some of the posts in here it's obvious that:

A) Some of you are so blinded by your hatred of oil companies that the facts be damned

B) These threads need to go to DC

morphius
06-18-2007, 03:20 PM
I want the government to help orchestrate them going out of business.

or at least reduce their business by 80% so that all our oil needs are supplied domestically.
I want someone with some real money to finance something like the tesla motor cars so that they can get the price of manufacturing down, and build their family car.

Donger
06-19-2007, 08:21 PM
What doesn't seem to be understood is that even if we Americans reduce our demand by say 5%, other's will make it up and then some. This a a global issue.

BucEyedPea
06-19-2007, 08:29 PM
What doesn't seem to be understood is that even if we Americans reduce our demand by say 5%, other's will make it up and then some. This a a global issue.
According to one of the links I put up, if you look inside it, newer sources keep getting found too which is a factor in why long term the price has not increased that much, except for spikes due to wars/conflicts.

Bugeater
06-19-2007, 08:46 PM
What doesn't seem to be understood is that even if we Americans reduce our demand by say 5%, other's will make it up and then some. This a a global issue.
Well screw it then. I'll go ahead and buy that Expedition I've been eyeing.

Donger
06-19-2007, 08:52 PM
Well screw it then. I'll go ahead and buy that Expedition I've been eyeing.

Don't get me wrong; every bit of reduced demand helps a little. But that doesn't change the fact that the demand levels of China and India are increasing rapidly, and that oil is traded globally.