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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (339251)	6/3/2007 9:23:05 AM
From: combjelly	Read Replies (2) \| Respond to of 1572557

"Why haven't they built any refineries in the last 30 years?" The answer is really pretty straight-forward. And it isn't because the environmental regulations are too tough as some will opine. That is just a cost of doing business, and all of the industry has it. And it hasn't been because they are restricting supply to boost profits, at least that hasn't been true until recently. It might be a factor now. No, the biggest reason goes back nearly 35 years. That was when the Oil, Chemical and Atomic Workers(OCAW) staged a massive strike. Viewed in retrospect it was probably national, but it definitely covered Southeast Texas. Now that part of Texas was the world's largest refinery complex, nearly half of the petrochemicals refined in the US were produced in that area. And refinery work paid well, you could skate out of high school into an entry level job at $10 an hour. And it was basically two people pushing one broom. To put it in perspective, minimum wage was $2.15 an hour at that time. But, those jobs were only available to relatives of union members. So if you didn't have those qualifications, then the $2.15 an hour jobs were the only alternative. Or college. So why was the OCAW on strike? Because the refineries had been switching over to computer controlled processes and it had finally dawned on them that all those sweet jobs were in jeopardy. So they were attempting to force the refineries to keep those jobs as is, instead of something smart like retraining and severance packages like the industry was offering. So, the rank and file went on strike. It lasted for several years. The reason it lasted so long was the plants kept operating at full tilt. With only the non-union supervisors. The OCAW was too late to influence things, and later settled the strike with much less than the industry was offering before the strike started. The resulting changes were massive. The refineries have these huge parking lots. Before the strike, the lots were full, 24/7. Now, there is this little cluster of cars and trucks down by the main entrance, maybe 5% of what used to be there. In addition, with the computerized controls, the refineries are more efficient than they used to be. By a lot. There is less waste and the equipment can be used at a higher duty cycle. The efficiency went up so much, that many of the smaller refiners couldn't compete any more. Those refineries were crated up and shipped to China and India. Despite the loss of the smaller refineries, production was still able to keep up with demand. And when it didn't, well, there was always those parking lots that were never going to be used for anything else. So why break new ground? Just expand in place...

To: Road Walker who wrote (339251)	6/7/2007 12:36:23 PM
From: TimF	Read Replies (1) \| Respond to of 1572557

I don't understand the point you are trying to make by "...and are built into their gross margin." Sure, companies will pass taxes along to their customers whenever they can. But that's hardly a decent argument in support of the taxes. It means the consumer takes a hit. Why haven't they built any refineries in the last 30 years? Partially because of environmental regulations, partially because even without the additional cost of the regulations, new refineries are very expensive, partially because the market is cyclical, and companies worry about making billion dollar investments only to have demand turn down (or not grow as much as expected, or have other supplies come on line), partially for a lot of reasons. But the biggest reason may be that instead of building brand new refineries, older ones where expanded. So there has been investments in refineries in the last 30 years.