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Getting Better Transparency From Oil Refineries
Hugh Pickens writes "Gregg Laskoski reports in U.S. News and World Report that virtually all of the retail gasoline price volatility that Americans experienced this past year was connected to significant problems at refineries. It was those refineries' vulnerability that subjected U.S. consumers to the year's highest average price ever, $3.63 per gallon. February delivered the BP refinery fire in Cherry Point, Washington that led to gasoline price spikes all along the Pacific coast, refinery problems in the Great Lakes region pushed Chicago gas prices to an all-time high of $4.56 per gallon, and over the summer, west coast refineries incurred outages, and California saw record highs in most markets, with Los Angeles gasoline's average price peaking at $4.72/gallon in October. Finally after Reuters reported that some 7,700 gallons of fuel spilled from Phillips 66's Bayway refinery in Linden, NJ, after Hurricane Sandy, New Jersey environmental protection officials said they were not made aware of a major spill at the Bayway plant, and the refinery failed to respond to inquiries from Reuters reporters. 'Too many times, history has shown us, the Phillips 66 response or lack thereof characterizes the standard practice of the oil industry. Refineries often fail or are slow to communicate problems that create significant disruptions to fuel supplies and spikes in retail gasoline prices. More often than not, scant information is provided reluctantly, if at all,' writes Laskoski. 'When such things occur is silence from refineries acceptable? Or does our government and the electorate who put them there have a right to know what's really going on?'"
Speculators demand more transparency so they can jack the price of futures every time a breaker trips at a refinery.
I spend 10 years working in the oil and gas refining industry, and I can say first hand that most of these problems and prolonged reductions in output are tied directly and wholly to excessive, brutal, inflexible, and sluggish government red tape.
At one refinery we were doing a new control system for, the refiner discovered a bad gas overpressure valve that was leaking slightly. The process for handling such an event is to immediately scram the refinery, and file 12 different applications with EPA, OSHA, and other government agencies to beg for permission to fix it. In that particular case that whole section of the refinery was down for 9 weeks.
Most people have no idea just how difficult it is to deal with the administration, and this one especially, when it comes to oil and gas production. This administration is not at all interested in a steady and cheap supply of oil and gas products - and I say that with firsthand experience.
$3.63/gallon? $3.63/GALLON?!? If your northern neighbours saw those prices there would be a line up 3 blocks down the fucking road!!! We haven't seen prices that low since at least 2002. Americans need to stop bitching about having some of the lowest gas prices in the world.
April 17, 2012
http://money.cnn.com/2012/04/17/markets/obama-oil-speculators/index.htm
The new proposals require oil traders to put up more of their own money for transactions, ask for more money for market enforcement and monitoring activities, and call for higher penalties for market manipulation.
"None of these will bring gas prices down overnight," Obama said at a White House press. "But they will prevent market manipulation, and help protect consumers."
I think we should just kick speculators out completely, but then again,
I also think that fair, competitive, and transparent markets are better than "free" markets.
The numbers I've seen quoted are that the oil market is 70% speculators and 30% producers/users.
Historically, that number has been the opposite, with producers/users makeing up 70% of the market.
I'm not disputing that refinery problems are responsible for localized price spikes, but overall prices have gone up because speculators are moving the market towards higher prices.
[Fuck Beta]
o0t!
Wrong. There is excess capacity.
What really happens is that excess refinery capacity is either mothballed or used to manufacture products for export.
http://www.reuters.com/article/2011/03/21/valero-klesse-idUSWEN981620110321
With the crappy worldwide economy and high prices of crude demand for gasoline is decreasing.
Sorry but the proposed pipeline would not reduce gasoline prices in any way, it would carry tar sand sludge to Texas refineries on the Gulf coast which will then produce fuels that go on the open international market. Yes I said sludge, it isn't even oil, it is a bitumen hydrocarbon 'product' called dilbit. A bizarre highly corrosive and sticky pipeline fluid that sinks in water. Want that pipeline pumping the stuff through your state at 1400 PSI?
By the way, what where Exxon and BP's reported profits last year?
Annual 2012 reports not out yet in most part so these are quarterlies.
* signifies Dow Jones Industrial Average component.
Apple's profit margin was 26.67%.
Google's was 22.20%.
*Intel's was 22.13%.
*JPMorgan Chase's was 21.97%.
*McDonald's was 19.85%.
*Coca-Cola's was 18.48%.
*Cisco's was 17.90%.
*American Express' was 17.12%.
*Pfizer's was 15.58%.
*IBM's was 15.53%.
*3M's was 14.89%
*Microsoft's was 14.21%.
*Walt Disney's was 13.44%.
Ford's 3rd quarter profit margin was 13.35%.
*Johnson & Johnson's was 12.90%.
*Proctor & Gamble's was 12.72%.
*Travelers' was 10.87%.
*Chevron's was 10.70%.
*Exxon's 3rd quarter profit margin was 10.40%.
*Catapillar's was 9.74%.
*GE's was 9.39%.
*United Technologies Corp's was 7.57%.
*Bank of America's was 6.75%.
*Merck's was 6.58%.
*DuPont's was 6.07%.
*Home Depot's was 5.91%.
*Boeing's 3rd quarter profit margin was 5.47%
*UnitedHealth Group's was 5.14%.
BP's 3rd quarter profit margin was 4.75%.
*Wal-Mart's was 3.57%.
Pulte Homes' was 3.57%.
*AT&T's was 3.49%.
*Verizon's was 2.70%.
*Alcoa's was 0.81%.
*Hewlett-Packards was -10.51%.
This a long line because for some reason SlashDot is saying that "Your comment has too few characters per line (currently 20.4)" but I don't know the minimum and why is there a minimum require when a person may be wanting to report facts and I have to keep typing because now it's 25.7 per line which still isn't enough nor is 27.3 characters per line so I must keep typing yet more meaningless stuff here in an attempt to get even more characters per line because even 30.4 characters per line are not enough so even more typing typing typing (where are the infinite number of monkeys when you need them?) because 33.1 characters per line still isn't enough so row, row, row your boat while buying the stairway to heaven as 35.5 characters per line are still not enough and "you seem a decent fellow I hate to kill you" " you seem a decent fellow I hate to die" and 38.2 characters per line are still not enough "we'll never survive" "nonsense. you only say that because no one ever has" and finally
Actually, the best way to demonstrate what happens without any kind of regulation at all, is to look at what is going on in Nigeria:
Almost 1.9 million barrels have have been spilled into the Niger river delta in the 20 years between 1976 and 1996 in close to 4,900 different incidents, and there doesn't seem to be any indication that this is going to reduce in the future.
See, in Nigeria there seems to be absolutely no business consequences to any kind of oil spills or accidents, so when the expenses of fixing a problem is greater than the expenses of the losses of oil, there's no incentive to pay for a fix.
After all, the only ones feeling the consequences is the local population, and they obviously aren't worth much to anyone.