$5 gas is here

[Rick Lee]

Originally Posted by gt350mike

Everyone points the finger at Bush for the rising fuel prices, but China is the main culprit I'm wondering how much gas/oil the average Chinese can buy? Is it China's industry consuming most of the oil or is it something else???

I swear China must subsidize their gas prices. It costs about the same there as it does here. But their gas stations are the size of airplane hangars, fully staffed with lots of people in shiny uniforms and there are lots of these giant gas stations in the countryside where there are almost no cars.

[pwd72s]

Originally Posted by Rick Lee

Then why are our roads so vastly inferior to those in Europe? I'd gladly pay double for gas here to have roads like those in Europe and I'd pay triple to have drivers here like those in Europe.

Uh...I didn't say there wasn't any corruption involved when it comes to USA road construction....

I've never driven in Europe, so I'll have to take your word on road quality...

[dd74]

Originally Posted by sammyg2

Dude, read. READ. R E A D.
The oil industry is not manipulating the market, they are already scrutinized constantly. I never said otherwise. This has nothing to do with your twisted commie political liberal fantasy world.
i suggested that an investor group with deep pockets may be playing funny business.

Originally Posted by sammyg2

If you were referring to the oil companies, you know nothing of what you speak. Your tin foil hat is too tight.
Learn about how it works before acting like you know a conspiracy is afoot, or how to solve it.

Well, Sammy, you prove one obvious truth about big oil: they have the very best in public relations spokesmen through the likes of you.

[Rick Lee]

Originally Posted by pwd72s

Uh...I didn't say there wasn't any corruption involved when it comes to USA road construction....

I've never driven in Europe, so I'll have to take your word on road quality...

I wasn't implying corruption, but rather the difference in quality. Roads and drivers in Europe are how we car freaks here fantasize about it being on another planet - no hoopties, no cell phone chatters, no left lane squatters, perfect signage, no roadkill. Oh, and potholes get fixed immediately. I don't think I've ever seen one in western Europe, just in the east.

[sammyg2]

Originally Posted by dd74

Well, Sammy, you prove one obvious truth about big oil: they have the very best in public relations spokesmen through the likes of you.

No, they have someone who is INFORMED and has studied the industry for decades. I understand the markets, I understand the process, I understand the way it works.

You on the other hand make accusations and suggestions of wrong doing but have spent no time trying to understand what you are talking about. You might as well be arguing with me about the surface of jupiter.
There's a difference. I know the truth, you ignore the truth.

[sammyg2]

You want lower gas prices? Call your congressman and ask him to investigate why the DWP or edison or whoever is supplying power to the refineries are having so much trouble keeping an uninterupted flow.
When you lose power at home your lights go out. When a refinery loses power people might get hurt or killed, and sometimes bad things happen that can cripple the refinery for a month or longer which costs the company many millions and creates higher prices for the consumer due to lower supply. I've been inside a refinery during 4 different complete power outages, it is a very scary time. People are running, scrambling to try and control a very dangerous process when all the normal controls are no longer working. Heaters are probably the most dangerous. Extremely flammable hydrocarbons flow through the heater tubes. When the flow stops, the temperature of the liquid escalates very quickly. The operators crank up steam turbines to pump the liquid and re-establish flow, but the boilers often trip during a power outage so the turbines only have enough steam to run for a short period. If the flow through the heater can't be maintained until the heater is cooled down, it can explode. Imagine filling your water heater at your house with a mixture of gasoline and hydrogen. Pressurize it to 2000 psi, turn the heater on full blast, then disconnect the thermostat so it won't shut off and the temperature get up to around 1000 degrees or more. Now take that heater and multiply the volume by about 50,000 times and hope you don't take out an entire city block when it goes boom. Not good. The only reason it doesn't take out the entire refinery is because of quick thinking and reactions of highly qualified people.
remember, moany of these refineries were designed and built a long time ago. the one I work at now was built during world war II to supply the US fighter pilots with high octane gasoline for the pacific theatre. Not exactly state of the art, but it's extremely difficult and expensive to rebuild it with more modern technology. We're always upgrading small parts of the plant, but the environmentalists, their lawyers, CARB, and AQMD kill requests for permits to build new units.
Below are two very recent examples:

SAN ANTONIO--(BUSINESS WIRE)--Tesoro Corporation (“Tesoro”) (NYSE:TSO - News) today announced that its 95,000-barrel-per-day Kapolei, Hawaii refinery on the island of Oahu was shut down early Sunday, Nov. 4, as a result of a power outage during a severe storm that moved through the area. The majority of the refinery’s units were brought back online safely; however the Continuous Reformer Unit (CRU) did incur some damage and is currently shut down for repairs. The CRU is involved with the production of high octane gasoline.

At this time, the refinery is running at a reduced rate and repairs to the reformer are under way. Tesoro is evaluating alternatives to fulfill customer requirements until repairs are completed. The timing for completion of repairs is under review.

Tesoro now expects its Kapolei refinery throughput in the range of 70,000 to 80,000 barrels per day during the fourth quarter 2007 with direct operating expense in the $2.60 to $3.20 per barrel range. Prior guidance was 80,000 to 85,000 barrels per day with expenses of $1.85 per barrel.

NEW YORK, Nov 8 (Reuters) - A diesel hydrotreater at Valero Energy Corp's (VLO.N: Quote, Profile, Research) 325,000-barrel-per-day (bpd) refinery in Port Arthur, Texas, will likely remain shut for two to four weeks for repairs after a Thursday morning fire, said sources familiar with refinery operations.

A Valero spokesman said the the company was still attempting to determine the extent of damage to the hydrotreater after a fire broke out in a heater on the unit.

"We're still evaluating the damage and the impact on production at the refinery, and there are no firm estimates yet," said Valero spokesman Bill Day.

No workers were injured in the fire, but one contractor was taken to the hospital for treatment of anxiety, Day said.

A large number of contractors were in the north area of the refinery preparing for upcoming unit overhauls, the sources said.

A power failure Thursday morning on the north side of the refinery caused heated feedstocks to stop moving through tubes in the heater. One of the tubes ruptured due to the heat build-up, the sources said.

The fire was extinguished in about an hour.

Most of the damage was thought confined to the heater, the sources said, and did not extend to the entire hydrotreater. Evaluation of the damage could last into the weekend. If the damage was contained primarily to the heater, repairs would probably take between two and four weeks.

[Superman]

Originally Posted by sammyg2

Dude, read. READ. R E A D.
The oil industry is not manipulating the market, they are already scrutinized constantly. I never said otherwise. This has nothing to do with your twisted commie political liberal fantasy world.
i suggested that an investor group with deep pockets may be playing funny business.

So......investors act like humans but oil industry managers don't? Workers in other industries are competitive, aggressive, imaginative, manipulative and ambitious but oil industry managers are not?

For there to be a meaningful dialogue between folks on the gubmit regulatory end (like me, frankly) and folks on the business/regulated end, there needs to be honesty. The innocent Pollyanna costume looks out of place on industry. I'm not saying that industry is evil. But don't try to look intelligent while you're trying to convince me that greed and human nature are not at work in your industry.

[Superman]

Originally Posted by pwd72s

Uh...I didn't say there wasn't any corruption involved when it comes to USA road construction....

I've never driven in Europe, so I'll have to take your word on road quality...

I am in the public works construction industry. So is dd. Your department of transportation is responsible for ensuring you get what you paid for from the construction contractors. Your DOT is under a microscope inside a fishbowl, in that regard. Mine sure is. I wish I had a dollar for every study our legislature has commissioned to evade its responsibility to fund transportation infrastructure because it is afraid of the voters who think they should be getting better roads while their taxes are reduced. Fact is, we know how to build longer lasting roads. But it costs more. As a taxpayer, do you support those more expensive, longer lasting roads. No, I didn't think so. In Europe they understand the importance of quality.

(I wasn't really talking at you, Paul. Just general. Taxpayers have been told they should get tax cuts and better roads. I guess they'll believe what they want to believe)

[Superman]

Sammy. Give us the reasonable, logical, responsible explanation of why the oil industry is in a crisis due to lack of refining capacity. Well, let me restate that. The oil industry is not in a crisis, as I stated just now. The consumer is paying high prices, as a consequence of the refining bottleneck. Show us how the oil industry spins that in a way that shifts the blame to someone else. (I have a guess as to who is going to be implicated here. It starts with a "G." But again, the net effect is that consumers pay higher prices. So.....I guess the oil industry benefits from a gubmit failing? That's pretty convenient. Or clever.)

[sammyg2]

Sammy. Give us the reasonable, logical, responsible explanation of why the oil industry is in a crisis due to lack of refining capacity. Well, let me restate that. The oil industry is not in a crisis, as I stated just now. The consumer is paying high prices, as a consequence of the refining bottleneck. Show us how the oil industry spins that in a way that shifts the blame to someone else. (I have a guess as to who is going to be implicated here. It starts with a "G." But again, the net effect is that consumers pay higher prices. So.....I guess the oil industry benefits from a gubmit failing? That's pretty convenient. Or clever.)

Do your own research. You will find that refining capacity in the US has grown slowly, but the demand has grown much quicker and has outpaced domestic production. You will also find that we import a significant amount of fuel to make up for our deficit in domestic production. Ee haven't built a new refinery since the late 70s and since then hundreds of smaller refineries closed down because they were not profitable.
Existing refineries have upgraded and de-bottlenecked to increase capacity a little, but not enough to keep up with demand.
A little more research will show that previously importing fuel was cost effective, it was readily available and not all that expensive.
That has changed. Overseas development and increased demand abroad has created a bidding war, so instead of having an abundant easy supply to import, we are now competing for that supply so the cost has increased.
I'm not making it up, go look for yourself.

If we use more than we make (which is easily proven) we have to get it somewhere. if it costs more to import fuel, we pay more. If we lose some domestic production, it makes a much larger difference that before.
Just a little effort on your part will show you this is true. But it may be more convenient for you to continue blaming the big bad oil men and not do the research, that better fits into your agenda.

[Superman]

I don't doubt you a bit. What you're saying is that the oil industry considered the possibility of investing in refining infrastructure and dimissed it because the importing of fuel to address demand does not hurt them. It hurts the consumer. With higher fuel prices. From the oil industry's perspective, what's wrong with higher fuel prices? Nothing at all.

And now that we see there is a refining crisis, my guess is that the gubmit will need to step in and foot the bill for the infrastructure investment the industry failed to make. A double-win for the industry. And.......that decision won't happen until the oil barons are out of the White House because as I say, there really isn't anything wrong with high fuel prices.......from their perspective. Here, "White House" and "oil industry" are synonyms.

[legion]

Supe, building a refinery in this country is next to impossible.

Even after all of the impact studies and regulatory hurdles have been crossed, there can be decades of NIMBY and GreenPeace lawsuits. The refiners generally give up once the cost of the lawsuits has exceeded the expected profit from the proposed refinery. (And they ALWAYS do.)

[Superman]

Thank you, Chris. I didn't think it would take this long to be told it's the gubmit's fault. Fifteen minutes. Whooda thunk it?

[legion]

Clearly, you didn't read what I wrote.

[Superman]

Yeah, I read about the NIMBY and Greenpeace stuff you mentioned after the part about the impact studies and regulatory hurdles.

But okay, yeah, I get it. Perhaps you're suggesting the NIMBY and Greenpeace complications are more expensive than the regulatory stuff. And maybe that's true. Fact is that oil refinery equipment is wildly expensive. And so, it probably makes sense to essentially "outsource" that stuff. Somebody has built enough excess capacity to perform our refining work for us. Who needs American jobs, anyway. And American national security. And again, high fuel prices are not the end of the world, at least not from the perspective of the oil industry.

[legion]

With retail gasoline prices as high as they have been the last few years, refiners want desperately to increase capacity. And they have, as Sammy points out. They have used every trick in the book to increase efficiency and throughput. These are still subject to impact studies and regulatory approval, and they are done without too much difficulty.

But we have reached the point where they have gotten as much as possible out of existing refineries with every known trick. Refineries that have the real estate have even built new cracking units.

But we still need more, and our refining capacity is concentrated in just a few large refineries. If a bad storm hits the area of a refinery or a fire happens, it will take out much more capacity than in years past when there were more, smaller refineries.

The NIMBY and GreanPeace element has figured out how to use our courts to short-circuit the free market system. So on the one hand we have high demand, and on the other we have static supply. Price goes up.

[Superman]

In the elegant and simplistic view of capitalism, it is sometimes posited that consumers' goals and producers goals are aligned. Similar to the recording industry. But we know that artists want to distribute their art, and record producers want to maximize their earnings. Not necessarily aligned. Here, we have oil companies that intend to maximize their earnings, and we have consumers wanting to minimize their costs. And in between, we have Greenpeace behaving as a friend of the industry and an enemy of the consumer. Usually, these forces increase costs to businesses but those costs will not be realized here until the money is actually spent and the refineries are constructed. Until then, the net impact is high fuel prices. And the group that's holding the bag in terms of making decisions and effecting change......is the group that hopes to maximize its earnings. The oil industry. We pretend that this industry will invest in order to reduce prices, but that's not really the agenda. Investment will wait until prices have risen sufficiently.

[Steve PH]

Its about $8 a Gallon over here in the land of warm beer, lucas electrics and soccer hooligans so I don't have much sympathy!

[legion]

Originally Posted by Superman

Investment will wait until prices have risen sufficiently.

Here you are absolutely right. I believe that prices have risen enough to warrant the huge capital investment in new refineries, it appears that you do not. Truth is, neither of us know for sure. Sammy probably has a better idea than either of us.

[Superman]

If I were an oil company executive, then even if we were past the break-even point, I might wait until prices rise some more. Another thing I would do is whine about the difficulty and the impact on national security, and see if I can get gubmit funding or at least MASSIVE tax breaks. And of course, conservatives might think that's a good public investment while railing about the gubmit wasting their tax dollars. Certainly a better investment than health care for children.

I couldn't resist.