Good information Joe, and I agree with your analysts in general, but what is your opinion, or anyone else who may know, about the pump prices when you take into account that the last new refinery built in the United States was Marathan Ashland’s in Garyville, La. It was completed in 1976.
Now take into consideration that the US population in 1976 was only 218 million, yet as of today June 1, 2012, the population is 313 million. That is 100 million, or 43% more Americans. All things being equal in comparison, that means we have about 43% more of almost every category of people living today. 43% more babies, 43% more college students, 43% more families etc. etc. etc.
However, most importantly, that means 43% or more cars being driven. Think about that, 43% more Americans that need to be transported around than we did in 1976, yet we are supplying gasoline for those vehicles with the same amount of refineries as we did in 1976.
Oh and do not tell me we need Mass transit, it will never work in America.
(Plus, that does not include the 15 to 25 million illegals driving around causing hell.)
Now add in the fact that almost every state has numerous grades of gasoline mandated by different state statutes, it does seem to point to a very limited supply of gasoline for us. Even when you consider the current output in oil production. The way I see it, we could pump a trillion barrels of oil a day, but if we do not start building more refineries, the pump prices will never get back to below $2.00 a gallon.
Does anyone have information concerning the correlation between pump prices and refinery petroleum production vs the correlation between pump prices and oil production?
Seems to me the lack of refineries is actually a bigger problem than the lack of oil production. Am I wrong?
However, most importantly, that means 43% or more cars being driven. Think about that, 43% more Americans that need to be transported around than we did in 1976, yet we are supplying gasoline for those vehicles with the same amount of refineries as we did in 1976.I have thought about it. In 1976, for instance, one of the Muscle/luxury cars was the Olds Toronado which got a whopping 4 MPG in town. Otherwise, 16-17 MPG was considered good, in fact real good, and twenty miles to a gallon was reserved for little critters like Fiat 600s and Volkswagons, and on this side of the pond, the Vega and the Pinto. (I drove or rode in all 4 of those.) Now, though, after CAFE standards and revisions, and computerizing automobiles to the point where few shadetree mechanics can do much with them, 20 MPG is more the norm for a sedan, the new classes (compared to 1976) of Minivans and SUVs generally do as well or better than full sized cars used to (15-20 MPG), and a significant portion of the vehicle market has shifted to diesel (more on that in a minute).
So more vehicles are getting farther on less fuel.
Keep in mind, it isn't just the number of cars, but the miles they are being driven, and the Obama economy has an effect with far fewer people commuting to work.
In addition, those driving on diesel, are driving on a fuel more easily produced (before additives) than gasoline: diesel is a distillate, and a functional diesel fuel can be cooked out of crude oil with only a topping facility. There was a plan to build one of those in Western ND, send the light fraction of the crude one way (napthalenes), the heavy fraction in another direction, both as refinery and/or chemical plant feedstocks, and use the diesel locally. So diesel takes a fraction of the refinery plumbing and processes that gasoline does, fewer blends are needed, and less infrastructure. More diesel vehicles (especially light vehicles which get good mileage) means less gasoline to produce, too.
Another factor is that as much as 10% of the gasoline out there isn't gasoline, but ethanol, which is blended fairly close to point of sale because of its hygroscopic (water absorbing) nature, corrosion problems it would create in pipelines, etc.
Existing refineries have been expanded, which makes more sense than building separate new facilities as existing transportation hubs and infrastructure already go there. The bottleneck comes when there isn't enough capacity in the system as new sources of supply are found, which is why the Keystone pipeline was important, not only for Canadian producers, but for American ones, too, who would have been able t take advantage of some of the excess capacity.
Oh and do not tell me we need Mass transit, it will never work in America.
Don't worry, I live in North Dakota. There are places along coastal urban corridors where it might provide a means to move some of the population, house homeless, and nurture criminal activity, but not here. We do have Amtrack going through, but you can't get there from here, and require connecting changeovers to go someplace. I won't do the TSA grope thingy, and the nearest bus station is in another state. Fuhgeddaboutit.
We drive.
One thing you left out, though, is that pump prices have to support the refits refineries have had to undergo to remain compliant with ongoing moving-target EPA regulations. People who support those regulations and then complain that gas is "expensive" shot themselves in the foot. Unfortunately, we all have to suffer a bit for that.
Quick recap: Prices are the result of many factors, among them:
Multiple blends tailored toward specific areas.
Drilling costs on the rise which is reflected in refinery bid, and if it isn't, drilling will slow down and eventually stop (which will cause the price to go back up as supply drops).
Moving target regulatory standards imposed by the EPA.
Ethanol blending, and ethanol prices.
Transportation costs (the trucks and trains have to buy fuel, too).
Does anyone have information concerning the correlation between pump prices and refinery petroleum production vs the correlation between pump prices and oil production?
Thackney probably does, if anyone has those handy.
Seems to me the lack of refineries is actually a bigger problem than the lack of oil production. Am I wrong?
Believe it or not, we are exporting some refined products. Prices are set by bid in that market, too, like any of the other traded commodities. They then go down the wholesaler to retailer chain, and the retailer only makes enough from a load of gasoline to buy the next one, plus a very small profit. If it wasn't for the convenience store, or in (nowadays, more rarely) the service bays and towing, a lot of them would not be able to make it on just fuel sales.