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Are U.S. Gasoline Refiners Running Out Of Steam?
Posted on 7/6/22 at 9:04 am
Posted on 7/6/22 at 9:04 am
quote:
U.S. refineries have been operating at or near maximum utilization levels in recent weeks as demand recovers. Petroleum stocks are sitting at multi-year lows, and refining margins are sky-high. Refinery utilization at 95% is at its highest since before COVID—September 2019. Yet, refiners don’t have much room to safely raise capacity usage further, while the summer season with heat waves and hurricanes could suddenly take some capacity off the market, further straining gasoline supply and putting upward pressure on gasoline prices.
Refiners are running crude processing at full tilt. They are responding to U.S. President Joe Biden’s continuous pestering to produce more gasoline and lower prices at the pump, immediately, saying that there isn’t much spare capacity left to boost utilization rates without compromising safe operations. Analysts are of the same opinion, too.
A recent drop in international crude oil prices, which saw in June their first monthly drop since November 2021, coupled with lower gasoline demand and growing stocks in the past two weeks, have helped the average U.S. gasoline price ease back to below $5 a gallon, at $4.807 on July 4, down from a record-high of $5.016 on June 14.
quote:
The trend of high gasoline production is set to continue in the near future as refiners run at full tilt to take advantage of the high refining margins. The crack spreads are well above historical averages due to low inventories both in the U.S. and globally, fuel demand rising to near pre-pandemic levels, and lower product exports from Russia, the Energy Information Administration said last month. The EIA expects America’s refinery utilization to reach a monthly average level of 96% twice this summer, “near the upper limits of what refiners can consistently maintain.”
In its June Short-Term Energy Outlook (STEO), the administration forecast that U.S. refinery utilization would be relatively high this summer in response to strong wholesale prices for petroleum products. These petroleum product prices have increased more than the price of the crude oil used to make them.
quote:
But as refiner run rates rise, the risk of sudden outages also grows, analysts say.
“Running hard increases general stress on a unit, increasing the risk of an unplanned outage,” Robert Campbell, head of oil products research at consultancy Energy Aspects, told Bloomberg last week.
quote:
Then there is the Atlantic hurricane season, expected to repeat another above-average hurricane activity this year for the seventh consecutive above-average season, the National Oceanic and Atmospheric Administration (NOAA) warned in May, days ahead of the official start of the hurricane season on June 1.
quote:
Currently, U.S. refiners are producing at or near maximum levels, and they reiterated this in a letter last month in response to President Biden’s call to produce more gasoline and lower gasoline bills for American consumers.
“Without corresponding increases in crude oil production, any benefit from incremental refining capacity would be essentially nullified by the increased crude oil demand and likely higher price,” the presidents of the American Fuel & Petrochemical Manufacturers (AFPM) and the American Petroleum Institute (API) wrote in a letter to the President.
LINK
Posted on 7/6/22 at 9:06 am to ragincajun03
The suspicious person in me says this is a set-up for some sort of man-made disaster affecting gasoline production.
Anybody else trying to gaslight themselves into thinking this is paranoia? This is paranoia, isn't it?
Anybody else trying to gaslight themselves into thinking this is paranoia? This is paranoia, isn't it?
Posted on 7/6/22 at 9:09 am to Ace Midnight
quote:
The suspicious person in me says this is a set-up for some sort of man-made disaster affecting gasoline production.
Anybody else trying to gaslight themselves into thinking this is paranoia? This is paranoia, isn't it?
It isn't a very good process. One tornado, hurricane, earthquake, safety issue/explosion and we are in a bad spot.
People will say it is a conspiracy of some sorts. But, it is complete incompetence by Progressives who believed anyone could be president. Who believe we can just flip a switch and get on solar and wind.
Posted on 7/6/22 at 9:10 am to lsu13lsu
quote:
People will say it is a conspiracy of some sorts. But, it is complete incompetence by Progressives who believed anyone could be president. Who believe we can just flip a switch and get on solar and wind.
Yep
Posted on 7/6/22 at 9:20 am to lsu13lsu
All the talk for several years now about the oncoming, near future “energy transition” scared investors from venturing off into the planning and construction of new high capacity refineries.
Why risk time and money going through 3-5 years of planning, environmental studies, wetlands restoration projects, applications and approvals, then another 3 years or so of construction, before a single dollar can be made, when there’s all the political and world economic forum buzz promoting a tradition within only 15 years or so?
Who is going to plan and build for 7-10 years, only to stay in business for 5 years then have to shut down half or more of the facility?
Why risk time and money going through 3-5 years of planning, environmental studies, wetlands restoration projects, applications and approvals, then another 3 years or so of construction, before a single dollar can be made, when there’s all the political and world economic forum buzz promoting a tradition within only 15 years or so?
Who is going to plan and build for 7-10 years, only to stay in business for 5 years then have to shut down half or more of the facility?
Posted on 7/6/22 at 9:24 am to Ace Midnight
quote:
nybody else trying to gaslight themselves into thinking this is paranoia? This is paranoia, isn't it?
Just because you are paranoid doesn't mean they aren't out to get you.
Posted on 7/6/22 at 9:25 am to ragincajun03
It's probably more likely a pull back in demand due to what seems like a looming, or already present recession, will provide the "relief" of prices and the full capacity of refiners.
Posted on 7/6/22 at 9:27 am to lsu13lsu
quote:
It isn't a very good process. One tornado, hurricane, earthquake, safety issue/explosion and we are in a bad spot.
Wow…. It’s almost like we should have a strategic reserve in case of emergency…..
Posted on 7/6/22 at 9:29 am to Klondikekajun
We should but that is probably a drop in the bucket these days even full. I guess it could be used for military and government only but is that something the citizens even want?
Posted on 7/6/22 at 9:31 am to lsu13lsu
Thinking out loud here, how many refineries are offline which could be brought back up given enough prep time?
I know at least one in the river parishes (Norco?) was looking for a buyer and shut down without takers. Granted, that one apparently had huge amounts in deferred maintenance, but it is an existing refinery and the costs associated with fixing it could be offset by the higher gas prices we are seeing.
I know at least one in the river parishes (Norco?) was looking for a buyer and shut down without takers. Granted, that one apparently had huge amounts in deferred maintenance, but it is an existing refinery and the costs associated with fixing it could be offset by the higher gas prices we are seeing.
Posted on 7/6/22 at 9:32 am to ragincajun03
Well, considering how many refineries have shutdown due to the current administrations policies, this isn’t surprising.
Posted on 7/6/22 at 9:33 am to teke184
Norco, like many other refineries in the US, is undergoing a transformation to a biodiesel plant.
Posted on 7/6/22 at 9:39 am to teke184
quote:
I know at least one in the river parishes (Norco?) was looking for a buyer and shut down without takers. Granted, that one apparently had huge amounts in deferred maintenance, but it is an existing refinery and the costs associated with fixing it could be offset by the higher gas prices we are seeing.
Convent
Posted on 7/6/22 at 9:41 am to ragincajun03
quote:
All the talk for several years now about the oncoming, near future “energy transition” scared investors from venturing off into the planning and construction of new high capacity refineries.
That same talk of “going green” and low carbon emissions but not having any decent guidelines on what would be required has also made investors wary of any future projects
Posted on 7/6/22 at 9:52 am to LSU4lyfe
quote:
considering how many refineries have shutdown due to the current administrations policies
Which ones are those that have shut down because of the current administration’s policies?
Posted on 7/6/22 at 9:52 am to teke184
quote:
Thinking out loud here, how many refineries are offline which could be brought back up given enough prep time?
I know at least one in the river parishes (Norco?) was looking for a buyer and shut down without takers.
It’s Convent and it would take a few years to get it back to a producing refinery if they decided to pivot on the future of the place, which they are not going to do.
This post was edited on 7/6/22 at 9:54 am
Posted on 7/6/22 at 9:58 am to LSU4lyfe
quote:
Norco, like many other refineries in the US, is undergoing a transformation to a biodiesel plan
I feel like a broken record posting this, but do you know why?
Look up the EPA's RINS "program". RINS is a way to tax the hell out of refiners and force them to either convert or pay billions to the FedGov in penalties for being in O&G (non-renewable).
They are killing O&G without any heavy lifting whatsoever. RINS used to be pennies per RIN but are now at around $1.50 and climbing. Eventually, refiners will be taxed out of business because of it, worsening this crisis.
Posted on 7/6/22 at 10:03 am to ragincajun03
Republicans if they get control really need to pass a bill protecting oil and gas as critical infrastructure and limiting further regulatory actions against it
Posted on 7/6/22 at 10:34 am to Klondikekajun
quote:
Wow…. It’s almost like we should have a strategic reserve in case of emergency…..
This is a dumb take. How will you refine the oil if a refinery is down due to above mentioned scenarios. Obviously there's more than 1 refinery but it will affect overall capacity.
Posted on 7/6/22 at 10:38 am to Oates Mustache
quote:
Look up the EPA's RINS "program". RINS is a way to tax the hell out of refiners and force them to either convert or pay billions to the FedGov in penalties for being in O&G (non-renewable).
They are killing O&G without any heavy lifting whatsoever. RINS used to be pennies per RIN but are now at around $1.50 and climbing. Eventually, refiners will be taxed out of business because of it, worsening this crisis.
What are the chances of the SCOTUS ruling providing relief from such overbearing guidelines, hell taxes, by the EPA? It seems like RINS would fall under the same umbrella as the cap and trade shite on coal-fired energy plants that brought about that ruling.
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