Posted on 06/16/2022 9:28:15 PM PDT by SeekAndFind
This week, Joe Biden made a big deal out of sending a “warning letter” to U.S. refineries about their supposedly inflated profit margins this year. It was part of his strategy of attempting to blame the oil and gas industry for the high prices everyone is paying for gas, diesel, and heating oil. (At least when he’s not trying to blame Vladimir Putin.) In very short order, two associations representing different elements of the industry got together and sent a letter right back to the President. The American Fuel & Petrochemical Manufacturers (AFPM) joined with the American Petroleum Institute (API) in an effort to patiently explain to the president how the oil and gas industry actually works as well as the challenges they are currently confronting leading to significant supply-side issues. Whether this sinks in or not remains to be seen.
“Our industry is dedicated to providing affordable, reliable, and sustainable fuels and other petroleum products for Americans and our global allies, as we have done for decades, including throughout the COVID pandemic when many of our companies experienced financial losses…
“With a global energy crunch underway, much focus has been placed on crude oil supply and demand. Yet crude oil has no utilitarian value until it runs through a refinery and gets processed into fuels like wholesale gasoline, diesel and jet fuel. Because of this, it’s not an overstatement to say that energy security requires a strong refining sector.
“AFPM, API, and our member companies appreciated the opportunity to make contact with your administration—as recently as this week—both to share data and analysis on what is happening in global energy markets and to provide concrete and practicable solutions for addressing today’s high-price environment.
AFPM also included a link to an article that they already prepared for both the government and the public that explains the complexity of the refinery process and how the global oil market actually works. This is a subject that we previously covered here in great detail while trying to sound the alarm over the liquid fuel crunch that’s approaching.
We’ve lost seven refineries in the past few years. Some were shut down while others were converted to process biofuels instead of gasoline, diesel, and jet fuel. Lower refinery capacity means less of those products can be delivered each day. As the linked AFPM article explains, the refineries that went offline can’t simply be “restarted” with the flip of a switch as Biden is demanding. It’s a process that takes years.
Also, there isn’t just one “oil and gas industry” that’s responsible for all of this. There are literally hundreds of different companies involved in energy exploration, drilling, liquid oil or gas transportation, refining, and the eventual delivery of finished fuel products. Each operates inside the constraints of the global market. Yelling at them and saying “the industry” needs to “do something” to lower gas prices is a fool’s errand. But the current conditions were caused by a combination of government policies and global market changes.
The problem here is that we have people in the government – including the President – trying to tinker with a massive industry when they clearly have no clue whatsoever as to how it works. This isn’t a political problem with a political solution available. It’s a combination of regulatory issues and market forces that march to their own drums. And no “strongly worded letter” is going to change those facts. There are things the Biden administration could be doing today that would begin to alleviate these issues, but they refuse to do them because such actions would be politically unpopular with the liberal base.
If the price of corn rises, a farmer may get a windfall for his produce. That doesn’t mean he’s price gouging.
“windfall profits”, “pay your fair share” are all trigger phrases for the wealth envy crowd.
“ The problem here is that we have people in the government – including the President – trying to tinker with a massive industry when they clearly have no clue whatsoever as to how it works.”
The money quote.
And the premise for Atlas Shrugged.
The apparatchiks will have the cars, the yachts, the airplanes, the dachas by the water, partying with all the gourmet foods guarded by machine guns.
You will eat beets, cabbage and potatoes.
It would send a message if the oil companies just decided to shut down for a week.
A bit like the average layman instructing the heart surgeon on how to perform his aortic valve replacement.
In related news.
Information from another forum, maybe some of out TX members can comment?
“The Lyondell refinery in Houston has been for sale for the last 2 years.
The companies that can afford it won’t buy it and the smaller ones that want it, can’t afford it. They say if it’s a no sale by the end of the year, they will shutter it.
It’s the 5th largest refinery in the US, and makes almost 300K barrels of gas per day.
They claim to be running at a loss.
Lyondell, while a large refiner has a problem with their distribution system.
Since they aren’t a branded fuel and don’t have any national scale, they give up price points in the market compared to their competitors.
Compound that with a very narrow or non-existent crack spread and you can see their dilemma.
They continue to run at a loss because the environmental liability of shuttering a running plant is formidable.
The reason the Exxon’s and Shell’s do not want to buy the facility is that it the only union refinery in the area”.
Have you lately checked the price of diesel that is required to operate farm equipment?
.
The last sentence in the excerpt is telling; i.e., it is union. That is probably one of the reasons that they are running without a profit.
Unions are very stubborn. Union leaders specialize in cutting of the noses of their members in order to make sure management’s faces are spited. They will refuse to make meaningful concession even though EVERYONE WILL LOSE THEIR JOBS!!!
Yet the Saudis run the country’s largest refinery in the same area.
Pfft. Brandon was a wildcatter in Scranton PA where he discovered oil.
Hope the morons who “voted” for Burden are happy now.
Rachel has a penis. It doesn’t know how to do heart surgery. But I digress....
Biden could end his sanctions against the oil industry.
END THE SANCTION NOW!
Biden doesn’t know what the hell is going on around him THAT IS A FACT, I believe that Obama is running the country and his main goal has ALWAYS BEEN the destruction of America there will NEVER be a course change with Obama at the helm PERIOD!!! Winning in 2022 is not going to help a single thing the republicans will say just as they have always done that we NEED the White House our hands are tied!! When we gave them ALL THREE branches we got the middle finger, I honestly can’t believe that people STILL believe that with the house and senate these bastards will fight to change ONE THING we will get the same stinking excuses!!!
Not going to happen. He’s going to nationalize the oil and transportation industries as a response to this mess.
Good friend of mine works at the Marathon refinery in Texas City, TX. They are presently maxed out. Refining 625,000 bbls oil per day, 21,000,000 gals gasoline per day, but also jet fuel, cruise ship oil, hydrogen, benzene, propane, butane, propylene for plastics, sulfur for drug companies, coke anode for Silicon Valley, asphalt for roads....it’s a bunch of other things besides gasoline Brandon.
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