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Pastimes : The California Energy Crisis - Information & Forum
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To: Raymond Duray who wrote (536)6/15/2001 7:50:27 AM
From: GVTucker  Read Replies (2) of 1715
 
Raymond, RE: Today, refinery profits are higher than they have ever been in the history of the industry. About Six Bucks per Barrel.
Doesn't this strike you as a little bit odd? It sure does to me.


Odd? Why?

Refinery capacity has basically not changed for an entire decade (total capacity has grown by 9% total during this period). (http://www.eia.doe.gov/emeu/finance/sptopics/vam/tsld008.html) That is because refineries are an environmental nightmare, and most companies do not want to take on the environmental risk that goes with the refineries. Ever been to Beaumont, TX? If you haven't, don't go. Demand has strongly outpaced supply.

Next, look at the advent of reformulated gasoline instituted recently. The requirement of different gasolines in different states has worsened that capacity deficit.

That doesn't sound odd, that sounds like normal economics in motion.

The refinery business has been an absolutely CRAPPY business to be in for a very long time. The majors that didn't divest of their refinery capacity a few years ago only kept that capacity because they wanted to assure themselves of a place to send their crude. Look at this chart: eia.doe.gov

Refining and market margins for the majors has been way below the non-refining and marketing. If, as implied by your post, you think that the refiners should be prohibited from making the $6/barrel that they're making, then I suggest you invest in a bicycle company, because you sure as heck aren't going to be able to find gasoline to put in you car much longer. No one would ever invest in any capacity again, and the gas lines of the 70's would feel like a walk in the park.
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