Gas Prices Rise on Refineries’ Record Failures

NY Times ^ | July 22, 2007 | JAD MOUAWAD

[Alberta's Child]

I hate to break this to you, but if you talk to anyone with a rudimentary knowledge of thermodynamics, mechanical engineering, etc. you'll find out a couple of things:

1. It costs more to produce a unit of ethanol than it does to produce a unit of oil-based fuel. Ethanol's primary flaw is that the amount of energy required to produce it actually exceeds the amount of energy it provides as a finished product.

2. Ethanol actually burns less efficiently than gasoline, so a vehicle must burn more ethanol-based fuel to travel the same distance it would travel on gasoline.

The combination of these two points exposes ethanol as a complete fraud along the lines of Al Gore's global warming nonsense.

The only idiots out there are the ones who repeat the lies of big oil vs ethanol vs speculation.

What makes "Big Agribusiness" any more credible than "Big Oil" when it comes to the facts of energy production and consumption? At least "Big Oil" has one very important, relevant point on its side when it comes to energy . . . the commodity it produces -- a fossil fuel -- actually has stored energy that makes it far more economical to use than any other comparable form of energy at this point in time (and likely for the foreseeable future).

[Poser]

You don’t suppose the oil companies would schedule their refinery down time to maximize profits do you? Nah! Couldn’t happen.

Increase profits and put pressure on politicians at the same time. It’s a win-win for the oil companies. I hope the politicians act quickly to allow more refineries and a little competition. Without competition, the prices will continue to climb, as will the profits.

[o_zarkman44]

Your comparisons about the cost of ethanol production are based on ethanol being a stand alone product of the distilling process, which it is not.
The corn mash solids left over from the distilling process are marketed as a high protein feed which is then fed to livestock and poultry. I know you are not considering the corn mash as something usable because it is not going into your gas tank.

And when figuring the cost of petroleum based energy production, don’t forget the PREMIUM costs associated with military protection for the foreign oil fields we are so addicted to. Those costs are a DIRECT taxpayer subsidy of oil production on foreign soil. Escorting oil tankers out of the Persian Gulf ties up huge military resources and taxpayers are paying out the nose, and people are dying, so you can drive 50 miles to work.

Oil transported from foreign shores has a much higher price associated with the transport than domestic oil. But since envirowackos have blocked any new oil exploration in America pipelines constructed and maintained by American workers are not being built. But the ethanol production facilities are providing decent Americans with decent jobs. They are allowing agriculture to finally reap some rewards for being the most efficient industry in America instead of dumping corn on the ground to rot while 100,000 family farms have gone broke over the past decade.

Face it. The economics of energy are complicated by a variety of factors. No matter what we use, there are going to be many costs involved in a gallon of gasoline or whatever we put in our tank. One must place an accurate accounting of ALL costs associated in the chain of production and not just single out the most convenient and obvious comparisons put forth by big oil propagandists.

[Alberta's Child]

Everything you've said about the indirect subsidies -- particularly in the form of military expenses -- of the oil industry is correct, but it's worth noting that from the standpoint of the U.S., these subsidies should be diminishing over time. In the last 5-10 years both Canada and Mexico have surpassed Saudi Arabia as the largest suppliers of foreign oil to the U.S., and within the next 5 years I expect Venezuela and Nigeria to do the same. And even much of the talk about the influence that environmentalists have used to block domestic exploration and extraction efforts is a lot of nonsense. When people talk about perhaps someday drilling 150,000 barrels per day in the Arctic National Wildlife Refuge, I laugh my @ss off because I know that the real objective in the energy industry is to get at least 10 times more oil than that from other places. The ANWR "controversy" is just a lot of nonsense that is being used to mask what is really going on with domestic oil extraction.

The simple truth -- which nobody really wants to admit -- is that U.S. military resources are being used in the Middle East mainly to protect someone else's oil (i.e., Europe and Asia), not ours.

I'd also point out that ethanol's other major flaw -- the sheer economics of fuel production and consumption -- is now starting to rear its ugly head. There's just no way in hell this country could ever produce enough corn to meet even a tiny fraction of our energy needs, and once the demand for ethanol passed a certain point the economic impact across multiple industries became absurd -- i.e., using food as a fuel source, thereby driving up the cost of everything from corn-based food products and all kinds of meat products, too.

[webheart]

I have a feeling that this story was placed today because of the fact that Democrat candidates are supposed to be answering YouTube questions, and one of them is bound to be “why is gas so expensive?” I’m sure there is an angle about oil companies not spending enough of their obscene profits on keeping refineries running.

[o_zarkman44]

We can agree on most issues related to energy.

I think the flaw in the ethanol strategy is that ethanol consumption should be more of a regional source than mandating every state to incorporate ethanol into fuel.
In fact, regional energy strategy could reduce transportation costs by utilizing local production in a regional strategy.
However, some regions will fall short of having an ability to produce sufficient energy to drive the local economy.
One part of the country may benefit more from solar or nuclear power and electric cars. Another region may have ample gasoline and oil. Another may have coal that can be made into another form of liquid fuel. Then there is propane. Fuel from garbage etc. A good energy strategy is to incorporate ALL forms of energy based on production location and consumption rates. Some areas may fall short of having the ability to supplement energy consumption. I think that areas that maximize energy production should be rewarded for efficiency. While the areas that fall short have to develop incentives to meet their needs. The underlaying problem with regional energy is that people would have to give up their freedom of driving cross country unless they converted to a hybrid vehicle that could utilize multiple fuels.

The fact is, there is no ONE form of energy that can be dominant if there is ever to be a degree of energy self sufficiency. We have to utilize every source, and be efficient in the production and transportation of each source so as to maximize it’s energy output.
No matter what form of energy we use, there is a guaranteed consequence that the cost of everything is going to go up based on the energy formula.

[Eva]

The delayed maintenance has little/nothing to do with Katrina and everything to do with maximizing profits. The oil industry, led by BP, operates on a system of competition between like cost centers. In other words they pit all refineries against each other, basing executive bonuses on the profit rankings of each refinery.

BP’s MO has always been that they will not spend any money on environmental or safety until the government requires it and enforces it. Right now EXXON is suing BP to force BP to accept some of the responsibility for the Valdez spill because BP, as head of Alyeska, had refused to spend any money on oil spill preparedness. The BP executive said, at the time, that they were not going to spend any money in Alaska until the government forced them to, because they had already spent too much money on oil spill preparedness in the North Sea.

[RightWhale]

A stray thought on the number of refineries built inside the USA in recent decades. The refineries are running at 95% of capacity or so, but guess what? oil production worldwide is also at 95% of capacity or so. Seems like more refineries would be kind of pointless since the world oil glut ended in 1973.