Oil refineries
Some time ago, I recall people on the forums claiming that the main reason for the spike in fuel prices in 2008 was lack of refinery capacity.
Today, I noticed a quick news brief from Reuters. To quote:
“Refinery utilization was up 1.7 percent to 83.1 percent, against the forecast for a 0.1 percentage point increase.”
That’s right, refinery usage is only 83%. Admittedly, we’re using less fuel, but it does seem that the main reason for the spike was not refinery capability but speculation driving up prices.
Given the gas mileage gains expected in the next few years, and the fuel savings we Americans can achieve just by changing our driving methods and, in multi-vehicle families, switching to the more efficient vehicle when possible, it seems that the oil refiners won’t be making any new refineries for quite some time. Not that they’ve expressed any desire to do so over the past decade; companies have been closing down smaller refineries and investing in their bigger ones, to increase profitability. Building a whole new refinery, even if we were closer to 100% capacity, would most likely be less cost effective than adding capacity to existing facilities.
Now that the hysteria has died down, and crowds no longer chant simple solutions to complex problems, I hope people can re-examine their opinions on energy related matters and perhaps choose rational, comprehensive solutions. I don’t believe there’s any one panacea to our future energy needs, but I think that a combination of “best tools for the job” — biodiesel, gasoline, wind, solar, existing nuclear, oil, geothermal, electric, hydro, shale, natural gas, etc. — will be the best solution, coupled with a long term government-industry plan to get us there.
For those who say anything related to government is condemned to failure, I will just point out that the FCC was created at the demand of industry, to straighten out the mess of frequencies and keep broadcasting reliable. While the FCC is by no means perfect – it has, in recent times, reportedly made life difficult for the smallest stations – it has done an exemplary job of making sure that radio stations do not interfere with each other, and that your beeper doesn’t set off a burglar alarm down the street.
Refinery usage is not the problem. It ‘s the botique formula of gasoline that is the problem. If you live in Atlanta and the gubmnen’t says you have to use “Atlanta gas” and a certain hurricane blows in the Gulf coast and take out a revinery you won’t get your “Atlanta gas”. You can’t just start making it at a another refinery – they are busy making “California gas” and can’t shutdown to make your gas. Guess what happen’s to prices? MOre refinery capacity WOULD help. But what would really help is one formula for all gas. Oh, and I haven’t even talked about seasonal blends afor winter, summer, etc. Besides I only heard that the fuel spike was caused by speculators. It was during Katrina that refinery capacity came to the fore.
You can blame gubmint requirements for seasonal blends – though I’ve heard most of those are to keep the gasoline working properly in the cars in different weather. Frankly I think we can live with a minor shortage every two or three decades in return for the reduced pollution. However, fact is, you can blame that one on the oilmakers. They knew the requirements when they chose to start shutting down refineries, chasing those higher profits.
I have to agree with Windswords on this one. The GAO published a report a few years ago documenting the problem. It’s available at http://www.gao.gov/new.items/d05421.pdf. The problem isn’t the feds, it’s state and local goverments that come up with their own blends rather than using a blend already being produced. I am not opposed to creating seasonal blends to reduce pollution in different seasons, but common sense needs to dictate how many different blends are necessary in order to simplify production and distribution.
I’m in Maryland. If there is a shortage in “Atlanta gas” there is a shortage of Maryland gas. The formulations are the same during the summer months. Atlanta’s summer fuel schedule is shared by FL, TX, NC and SC and LA, NM, AZ and likely others. Unless you like the idea of vapor lock on hot days…
Here in the northern states we were moving to the California standard for pollution purposes. That’s when the EPA decided they didn’t want anyone other than them to make rules and killed it. It wasn’t just the emissions standard. The gas formula had to change for the different equipment in cars. If that had not been stopped it would no longer be an issue. If the EPA had not stopped the northeast states emissions plans we’d all be using “California Gas”.
I’m a bit more worried about plans to put yet more ethanol content into the mix. My PT Cruiser is not an E85 car and any mixture higher than 10% is likely to cause corrosion of any non-metal materials in the fuel system. I doubt very much this is covered by any warranty claims if they do this.
»crosslinked«