Refinery Outages and Gas

[English assassin]

Red, I hear what you're saying, and you're making some good points. BUT (there's always one ) you're not taking into account artificial market constraints. The people who run the refineries have been trying to build new refinery capacity for 15 years, and every time they do, the Audobon Society and the rest of the usual suspects gangs up to strongarm some judge into issuing a legal ruling to block the construction. Or the EPA yanks permits for no good reason. Or a bunch of other hamstring efforts. I agree with your reasoning, but you're overlooking some critical external factors that are preventing market forces from operating properly.

For real? I was just going to do a post pointing out (well, repeating, really) that its most ecomonically efficient for a corporation to sweat its assets, so a free marketeer really shouldn't expect the USA to have, say, a spare 25% of capacity sitting idle just in case a once in 100 years storm hits. But if the refimeries were in fact pressing for more capacity before (presumably not in the gulf), I will shut up.

I doubt it will affect us much in the UK, since only about 20% of our petrol price is the cost of the actual petrol anyway. Whoop de whoop, for once paying high taxes is great. errr

[Ser Clegane]

That 3.30 seems limited to a few stations now. The others are running about 2.79 to 3.00 at the moment. Houston tends to be a little higher than some areas, I think it is the required blends, but I'm not sure. The gasoline market is not my thing.

I talked to a colleague in North Carolina today and she mentioned that there were quite a number of gas stations actually running out of gas there

What share of the refinery capacity is currently effected?

I heard ballpark numbers in the range of 20% of capacity but that was rather hearsay...

I guess we will see quite some price peaks on the petrochemicals spot market as well over the next weeks/months

[Don Corleone]

I talked to a colleague in North Carolina today and she mentioned that there were quite a number of gas stations actually running out of gas there

What share of the refinery capacity is currently effected?

I heard ballpark numbers in the range of 20% of capacity but that was rather hearsay...

I guess we will see quite some price peaks on the petrochemicals spot market as well over the next weeks/months

Yep, half the stations in the city of Charlotte are out. Greensboro is out at about 1/3. The price has increased quite a bit, and the Governor has asked that all non-essential driving be cancelled.

We currently receive 90% of our refined gasoline from the gulf refineries, through a pipeline. Those pipelines are now pumping ~30% of what they were 5 days ago. At current rates, they expect the entire state to be dry by next Wednesday. South Carolina, Georgia, Tenessee, Florida, Alababama, and of course, Mississipi & Lousiana are in much of the same pickle.

[drone]

I talked to a colleague in North Carolina today and she mentioned that there were quite a number of gas stations actually running out of gas there

What share of the refinery capacity is currently effected?

I heard ballpark numbers in the range of 20% of capacity but that was rather hearsay...

I guess we will see quite some price peaks on the petrochemicals spot market as well over the next weeks/months

I just drove by a Shell station that had $5.99 a gallon on the sign. Sinice an Exxon Station down the road still had $3 a gallon, I'm assuming that Shell station is out, or close to it (or just gouging like mad).

[yesdachi]

Does anyone know what kind of preparations gas stations make to handle a situation where their regular gas distributor is unavailable? Most companies I work with have back-up vendors and some have back-ups to the back-ups. Can gas stations use other vendors for gas? A gas station cant make money without a product, as greedy as they seem to be I would think they would have a back-up to their back-up.

Perhaps if they have sold their entire supply at double the regular price they don’t care.

[Don Corleone]

The problem isn't the distributor, it's the source. If you follow the flow of refined gasoline around the country, it all flows through pipelines and rail cars from I believe 5 major refineries. They're not interconnected. If your backup, and your backup's backup, and so on are all connected to the same pipleline, there ain't much you can do.

[Red Harvest]

Yep, half the stations in the city of Charlotte are out. Greensboro is out at about 1/3. The price has increased quite a bit, and the Governor has asked that all non-essential driving be cancelled.

We currently receive 90% of our refined gasoline from the gulf refineries, through a pipeline. Those pipelines are now pumping ~30% of what they were 5 days ago. At current rates, they expect the entire state to be dry by next Wednesday. South Carolina, Georgia, Tenessee, Florida, Alababama, and of course, Mississipi & Lousiana are in much of the same pickle.

Yes, that was anticipated/feared early on, the pumping stations are coming back, but at reduced rates. Pipelines are very expensive to build and maintain (so we get back to the market forces part again.) Interconnection will be limited since most of the time it would not be useful. It is going to be a major crisis regionally. I'm sorry it is going to hit you guys so hard, I hope they figure out some sort of response. Some stations in rural areas here that had trouble arranging deliveries didn't raise their price outlandishly, instead they limited folks to ~10 gallons each.

This storm hit oil production, nat. gas production, refining, and distribution really hard. Nail the hub with something this big, and you have to expect major trouble.

[Gawain of Orkeny]

Gawain, Read what you just wrote and think about it for awhile. As I said before the price of OIL was not being limited by refining. You bought the Saudi line. If we shut off refining in the U.S. enough, oil prices worldwide will fall, because we are an net importer, and this would reduce our need for imports. Myth Busted.

Thats what you claim I say the opposite. So your saying if we shut off refining here the price of oil worldwide will go down? Have you lost your mind? How will that make us need less gas. It means we will have to import all our oil and refined products instead of a bit more than half as we currently do now driving worldwide prices through the roof. Hell according to this logic we should have shut them down a longtime ago. Myth busted.

[Red Harvest]

Thats what you claim I say the opposite. So your saying if we shut off refining here the price of oil worldwide will go down? Have you lost your mind? How will that make us need less gas. It means we will have to import all our oil and refined products instead of a bit more than half as we currently do now driving worldwide prices through the roof. Hell according to this logic we should have shut them down a longtime ago. Myth busted.

Gawain, now I understand why you are having trouble with all this. If we shut down our refineries we will not be using nearly as much oil and gasoline because we would only be able to import some fraction. Locally, at home our prices would be astronomical. World prices would tumble because there would be global oversupply. We wouldn't benefit from it.

That would persist for some time until global demand caught up or we adjusted to importing gasoline (infrastructure changes for transport, etc.) It would persist longer since it would likely cause global recession. But the excess would be soaked up by the world eventually (on the scale of years) as demand grew.

You share a problem common to many other Americans: the inability to separate gasoline from oil in their minds. Yes, they are related, but they are not the same thing. The second prooblem you share with many others is that you cannot tell the difference between regional and global impacts/markets/driving forces.

[Xiahou]

Thats what you claim I say the opposite. So your saying if we shut off refining here the price of oil worldwide will go down?

I bet prices on everything would go down- it'd be called a recession.

I don't know why someone would advocate that though...

[Steppe Merc]

It's over 3 dollars hear... and I thought 2.65 was nasty. And I was waiting for prices to go down to fill up my car (I don't drive much, but will once school starts), and I still have a half tank. Oh well.

[Xiahou]

It's over 3 dollars hear... and I thought 2.65 was nasty. And I was waiting for prices to go down to fill up my car (I don't drive much, but will once school starts), and I still have a half tank. Oh well.

Well, on the bright side- they're expecting the affected pipelines to be back to capacity by the end of the holiday weekend and many of the refineries are expected to be operating again within two weeks.

Combine that with the EPA fuel blend waiver and the end of the peak summer driving season and it's still reasonable to expect at least some price relief in the coming days. (prices are currently $3.19 here- from 2.53 tuesday)

edit: I'd be interested in hearing what backroom members think should be done about the high gas prices/shortages as a result of Katrina? Many politicians are beginning to talk about cutting fuel taxes temporarily or even legislating price controls. So as not to "poison the well" I'll hold my opinion for now.

[Red Harvest]

edit: I'd be interested in hearing what backroom members think should be done about the high gas prices/shortages as a result of Katrina? Many politicians are beginning to talk about cutting fuel taxes temporarily or even legislating price controls. So as not to "poison the well" I'll hold my opinion for now.

Price controls would create a greater shortage, since they would artificially sustain demand. They would be counterproductive to maintaining supply. Might not matter if supply is restored soon enough though.

Cutting fuel taxes would have a very small impact, prices have already risen more in the past 72 hours than the average total federal and state fuel taxes. It would also be counterproductive to maintaining supply.

This comes down to whether we want to treat the symptoms, or face the problem. The problem is a bonafide shortage due to distribution and refining. Price is not the source of the problem, it is a symptom. Most likely we will treat the regional symptoms and effectively cap the price short term. Unfortunately, that drives demand in the wrong direction for dealing with a shortage. Hopefully, with the distribution being restored, the spikes will halt.

It does illustrate how inelastic gasoline consumption is in the short and even mid term (as of course does the run up in prices over the past two years or so.) It takes a lot of price movement to change gasoline use substantially.

[Gawain of Orkeny]

Wow for once I totaly agree with Red Harvest. One thing I heard the otherday disturbed me. It was that if we all switched to hybrid cars today in 5 years oil consuption would be right back where it is today.

[Steppe Merc]

Huh. Well while while that is not great, it is better than nothing.

But I agree, we can't expect to just adjust the prices. We need to begin the adjustment to alternative fuel source now, because we are already seeing how fickel the gas supply and prices can be.

edit: They are expecting the prices to go back down? Good, I can wait a while to buy any gas. I'll just bum rides off my parents.

[Ser Clegane]

At the gas station in our street gas prices went from 1.27 EUR/liter last weekend to 1.47 today

EDIT: But don't get me wrong - I am aware that these are currently rather petty problems...

[Kagemusha]

In Finland the gas price elevated into 1,5 euro/liter.Its alltime high in here.

[Steppe Merc]

What is that in American dollars? I know a euro is more than a dollar, but...

But don't get me wrong - I am aware that these are currently rather petty problems...

Yeah, I feel bad about complaining about gas prices when people are dying...

[Kagemusha]

What is that in American dollars? I know a euro is more than a dollar, but...

Euro is roughly 1,25 US dollars and one gallon is roughly 3,8 litres so in Finland one gallon of gasoline would be 7,13 dollars.If i got it right.

[Steppe Merc]

Yikes.

[Kagemusha]

Tell me about it.

[Gawain of Orkeny]

The big difference is you people dont drive anywhere. THe US is huge compared to most of your countries. We think nothing of driving 1000 miles. The automoblie is far more a part of our culture. Most of us would be lost without one.

[Kagemusha]

Gawain dont generalize.Finland has roughly the same amount of area as Germany and we have Five million people.If you ever pay a visit here i would be happy to drop you in the middle of Lapland and you can go find a busstop from there.

[Ironside]

It's common to drive atleast 55km (34 miles) to daily work over there? And I'm living in the population dense area, so you can use public transportation with relative ease.
1.65 dollars/liter here

kagemusha
Don't be so evil, atleast give him a bike. I mean can the org survive without him for a month?

[Red Harvest]

It's common to drive atleast 55km (34 miles) to daily work over there? And I'm living in the population dense area, so you can use public transportation with relative ease.
1.65 dollars/liter here

Yep, 34 miles *one way* is not uncommon. Urban sprawl is a big part of it. I had a coworker who used to drive 99 miles one way each day before we started working together--he and his wife worked in different cities.

Volume public transport in the U.S. is limited to a few cities.

[Ironside]

Yep, 34 miles *one way* is not uncommon. Urban sprawl is a big part of it. I had a coworker who used to drive 99 miles one way each day before we started working together--he and his wife worked in different cities.

Volume public transport in the U.S. is limited to a few cities.

Interesting. How many hours do those people spend on actually go to thier working place? (one way)

[Kagemusha]

You are right Ironside .We cant abandon the president of the conservative club into lapland.But if i give him a laptop and GPRS connection to the internet so he could post about our leftist public transportation on his personal experience.

[Ironside]

You are right Ironside .We cant abandon the president of the conservative club into lapland.But if i give him a laptop and GPRS connection to the internet so he could post about our leftist public transportation on his personal experience.

Trow in some extra batteries for the laptop and we got a deal.

Gawain is an ex-marine so food shouldn't be a problem and even I can handle the water supplies in that area.

Uhm, Gawain feeling for a vacation in pleasant Scandinavia? Kagemucha and I can pay for it.

[Kagemusha]

Trow in some extra batteries for the laptop and we got a deal.

Gawain is an ex-marine so food shouldn't be a problem and even I can handle the water supplies in that area.

Uhm, Gawain feeling for a vacation in pleasant Scandinavia? Kagemucha and I can pay for it.

I think i can get some batteries. Yes drinking water shouldnt be a problem just find a creek and drink and if you are afraid of germs boil the water before.Altough i would be worried about Gawains health when he would start to shoot raindeers.Saami people might get bit moody.

[Ironside]

I think i can get some batteries. Yes drinking water shouldnt be a problem just find a creek and drink and if you are afraid of germs boil the water before.Altough i would be worried about Gawains health when he would start to shoot raindeers.Saami people might get bit moody.

Well they haven't meet an ex-US marine before

Ofcourse it's probably quite a few Saami with fjälljägarutbildning (equals about the best reglar units we have here and they are trained speciffically for the terrain we're talking about here)





I've gotten an idea for a new reality show here.