gas prices, take 2 Options

[scotty914]

okay with the hurrican i have been watching a lot of fox news. according to opec they will pump more oil to help. here is the crazy part opec is going to hold a meeting next month to figure out why gas prices are as high as they are, they stated the opec pumps and sells the oil at 12 per barrel.

so who ever is buying the oil at 12 per barrel is marking it up to a current price of 67 a barrel, i wonder if this is along the lines of enron, artificially marking up the oil.

i have read a few things lately about oil wells, some thing like 70 % of the wells that were dry 10 to 20 years ago now have oil in them again, and but that they mean full flow pumping, not partial.

right now there is a 55 billion gallon oil surpluse ( just heard it ) in storage in this country.

[Sammy]

The last new oil refinery in the US was built in 1976 IIRC. Since that time the total number of refineries in the US has fallen by about 40% as most of the very small independant refineries closed down in the 80s and 90s due to very low or non-existant profits. The only ones to survive were the ones that could afford to get big enough to ride out the lean times. The remaining refineries expanded and improved production to make up for most of the lost capacity.

I worked for one of those small refining companies from 1986 to 1995 when they closed the doors and laid everyone off. They tried for 7 years to get enough capital to start it back up but they couldn't get anyone to finance it. For the last year and a half they have been tearing it down to build tilt-up warehouses. Talk about bad timing.

Building a new refinery wasn't economical up to this point because old refineries that were in financial trouble could be purchased for 10 to 15% of the cost to build a new one. Valero is a perfect example, 10 years ago they had one refinery. Now they have around 14. Most of em were purchased for between $250 and $500 million each. At the time that was a lot of money because profits were so low, today it seems incredibly cheap.
As refining continues to be profitable it will be much more difficult for a company to buy an existing refinery, then they will start considering building a new one which

BTW it will cost about $5 billion to build a new modern refinery with a capacity of around 200,000 bbls/day (middle sized). It would have to be RREALLLLLLY profitable to justify that kind of an outlay in a declining market.

but where would they put it? NIMBY.
It has to be close to a shipping port unless they want to pay a $billion to build a new pipeline or two. It should be near populous areas but relatively far away from competitor's refineries to be most profitable.
Aint no way that Mexifornia will allow a new refinery in the San Francisco area or in the LA basin, so that leaves the gulf coast or the east coast or Washington. I don't think Washington will alow a new refinery to be built on their unspoiled landscape. They don't want Exxon valdez. Maybe I'm wrong. I do know lots O'folks up there don't like the refinery in Anacordes.

The San Francisco tree hugger groups are doing everything they can to close down the Tesoro Golden Eagle refinery in Avon because of their less than stellar accident rate. Lawsuits up the ying-yang ever since it was owned by Tosco, then Ultramar, then tesoro. Public record.
Bay area gas prices are already sky high, I wonder how high they would go if the environ-'mental' (yuk yuk) lawyers manage to close down Tesoro Avon?

It won't do that much good to put another refinery in Louisiana or around Houston or Texas city, lots of em now and that market is typically depressed when compared to the rest of the country. Hard to make money where the competition is concentrated, and it costs money to ship the product to the rest of the country.

Canada? Maybe, but the politics are tough.

There has been plans for years to build a new refinery in the Yuma, Ariz area, so far it is all talk and environmental lawsuits unless something new has happened recently that I haven't heard of. Someone is trying to build it, someone else is trying to stop it and so far doing a darn good job.

If it were up and running now the gasoline would be cheaper in So Cal, ariz, NM, and maybe West Texas.
Thank the environmental fanatics and their lawyers next tiem you fill up.

Bottom line is this: we are using oil and gasoline as fast as we can make it and it is just going to get worse. We will eventually get by with less and less until it is so expensive only the wealthy will be able to afford it. We won't have a choice anymore.
How fast that happens will depend on how long we continue to use it up like it's going out of style.

By then I won't care, I'll have paddles on my row boat on the lake in front of my retirement home (IMG:http://www.914world.com/bbs2/html/emoticons/wink.gif)