American International Petroleum Corp Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : American International Petroleum Corp

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: richard hawkins who wrote (99)	6/25/1997 12:12:00 AM
From: Razorbak	of 11888

richard: <<I was wondering if you could shed more light on this phenomena of refineries being sold at 10% of their replacement cost.>> You're absolutely right. The value does go up and down cyclically with supply and demand, and we're now at the bottom of the seller's market. Refining capacity is greater than market demand dictates, so there is a surplus of petroleum products on the market. The problem stems from all the non-economic environmental investment that was mandated by the Clean Air Act in the early 90's. Everyone spent huge amounts of capital to come into compliance with the Clean Air Act, and in the process, took the liberty of expanding capacity through unannounced debottleneck projects, a phenomenon called "capacity creep". These incremental capacity increases at almost every refinery (often 10-15% in one fell swoop) simply wrecked the mature domestic downstream market (limited to about 2% growth/yr) for several years. Unfortunately the industry is finding that it takes a long time to grow out an oversupply situation when demand growth is effectively limited to 2%/yr and capacity creep continues at about 1%/yr. If you're interested in this issue, do a little trolling through some of Tosco's SEC documents and look for their purchases of the Bayway refinery in NJ, or the Ferndale refinery in WA, or the Marcus Hook refinery in PA. TOS is the industry leader in bottom fishing for cheap refining assets, turning them around, and making them immediately profitable for their shareholders. Tom O'Malley is a very sharp guy, but at the end of the day, he's still just a trader at heart. forbes.com Razor

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next