WSJ: Refining Incapacity - Politicians have done as much damage as hurricanes.

Washington Post ^ | September 28, 2005 | Editorial

[MEGoody]

Why not put them in the desert?

To save money on transportation costs.

[Ace of Spades]

The oil companies and environmentalists need each other. The oil companies need an excuse not to build new refineries, and the environmentalists need a boogeyman. It's a convenient arrangement for both.

[sono]

Govt is far worse ... Hurricanes are seasonal and cyclic.

[RedMonqey]

You scratch my back. I'll scratch yours...



Very convenient indeed.

[JLAGRAYFOX]

Evidently you have not heard of Caribbean Islands or Latin/South American countries? It's refineries I'm talking about!!! You gotta get with it!!! Following the MSM line is gonna lead you into a dead end!!! USA score, 379 refineries in 1979, 129 operating today. Twenty-two amendments on different blends of gasoline for environmental reasons in the uSA. You wanna know why gasoline is so high, ask your Democrat Party friends!!! You goota get with the program!!!

[thackney]

But you claimed the do not want refineries? Why would they expand the existing ones if this was true?

[Bulwark]

But you claimed the do not want refineries? Why would they expand the existing ones if this was true?

Did you read what I wrote chuckles? It's much, much cheaper to expand an existing refinery, and by expand you're not doing so much 'expansion' as 'diversification' to handle new blends and some of the less refined crudes. If any oil company built a whole new refinery, it'd take at least a decade to earn back that money. And, to be honest, there hasn't been much 'expansion' at all in this country.

[Salvation]

**Politicians have done as much damage as hurricanes.**

Absolutely.

[Bulwark]

Evidently you have not heard of Caribbean Islands or Latin/South American countries? It's refineries I'm talking about!!! You gotta get with it!!!

Alright... let's think this thru. Have you ever driven by a refinery? Or visited one? Or been inside one? I can answer yes to all three... I hope you've at least driven by one. Now, you'll notice those huge tanks. They're storage. They usually like to store both the crude and the processed gasoline (as well as the other byproducts of processing) in those 'tanks'.

Now tell me, on an 'offshore' refinery, where are they going to put the tanks. Let's look at the options. Tankers could work, except you can't really hold a precise position with them, and moving crude and processed on and off would be tough. Solo cups would work, but you don't have enough storage space on the rig? Your solution? Baggies is it?

[JLAGRAYFOX]

Unfortunately, you are not with the program, so dialogue with someone that does understand the term "offshore" is not productive. "Offshore" in this case means outside the United States, such as Aruba, where there is a very large refinery. Have fun!!!

[Bulwark]

Unfortunately, you are not with the program, so dialogue with someone that does understand the term "offshore" is not productive. "Offshore" in this case means outside the United States, such as Aruba, where there is a very large refinery. Have fun!!!

Ah you industry outsiders. You think you can just throw terms around. For that matter, you think you understand the oil industry... but ya don't. :)

[thackney]

Did you read what I wrote chuckles?

Yes I did, name calling aside. You wrote:

The oil companies are the ones who absolutely do not want more refineries. It makes no sense for them to build more.

I am still looking for you to defend that statement. I know it is cheaper to expand refineries. I do that type of work. And when expansion increases the total barrels of oil processed and refined products output, it really is expansion.

[Bulwark]

I am still looking for you to defend that statement. I know it is cheaper to expand refineries. I do that type of work. And when expansion increases the total barrels of oil processed and refined products output, it really is expansion.

You're not getting it chuckles. It's not so much expansion if you're increasing your capacity by 10%. If you build a new and modern facility, you're going to produce well over what your existing facilities produce. If you increase your capacity by 100%, you're going to increase the amount of product you have to sell, and you're going to have to sell it cheaper. They're not building any new refineries because they have just enough capacity to satisfy the market and slim enough margins to justify setting the prices at levels that they're comfortable with.

Everything comes down to pennies. Huge amounts of time are putting in to analysing statistics on how much money comes out of each barrel of oil, and to do that the entire lifecycle of the barrel is studied. How much it costs to get it out of the ground, ship (and via which ship, the rates do vary), refine, transport via pipeline, transport via pump, then finally pump into your car. There are many incredibly boring books written on the subject, trust me... I won't say more than that. If you add a new refinery into the mix, you're going to freakin capsize the whole system of balances that everyone has set up. Don't kid yourself. The oil companies don't work together, but they have a mutual inclination towards maintaining the status quo.