Gasoline refinery expansions scaled back By H. JOSEF HEBERT, Associated Press Writer
Sun Jun 17, 6:03 AM ET
WASHINGTON - With Congress and the White House pushing to increases the use of ethanol, the oil industry is scaling back its plans to expand refineries 隆陋 which could keep gasoline prices high, possibly for years to come.
But oil companies already have scaled those expansion plans back by nearly 40 percent. More cancellations are expected if Congress passes legislation now before the Senate calling for 15 billion gallons of ethanol use by 2015 and more than double that by 2022, say industry and government officials.
';These (expansion) decisions are being revisited in boardrooms across the refining sector,'; says Charlie Drevna, executive vice president of the National Petrochemical and Refiners Association
';By creating a situation of extremely tight supply, the oil companies gain control over price at the wholesale level,'; says Mark Cooper of the Consumer Federation of America. He argues the refining industry ';has no interest in creating spare (refining) capacity.';
President Bush has called for a 20 percent decline in gasoline use by 2017 and the Senate is debating legislation for huge increases in the use of ethanol as a motor fuel. So, oil companies see a growing uncertainty about future gasoline demand and less need to increase refinery capacity to make more gasoline.
A shortage of refineries frequently has been blamed by politicians for the sharp price spikes in gasoline.
This spring, refiners, hampered by outages, could not keep up with demand and imports were down because of greater fuel demand in Europe and elsewhere. Despite stable 隆陋 even sometimes declining 隆陋 oil prices, gasoline prices soared to record levels and remain well above $3 a gallon.
Consumer advocates maintain the oil industry likes it that way.
';By creating a situation of extremely tight supply, the oil companies gain control over price at the wholesale level,'; says Mark Cooper of the Consumer Federation of America. He argues the refining industry ';has no interest in creating spare (refining) capacity.';
Only last year, the Energy Department was told that refiners, reaping big profits and anticipating growing demand, were looking at boosting their refining capacity by 1.6 million barrels a day, a roughly 10 percent increase.
But oil companies already have scaled those expansion plans back by nearly 40 percent. More cancellations are expected if Congress passes legislation now before the Sensate calling for 15 billion gallons of ethanol use by 2015 and more than double that by 2022, say industry and government officials.
';These (expansion) decisions are being revisited in boardrooms across the refining sector,'; says Charlie Drevna, executive vice president of the National Petrochemical and Refiners AssociationShould the Oil companies be allowed to hold consumers hostage to high oil prices when profits are exorbitant?
Nations all over the world have nationalized their oil interests. The people of the United States could nationalized their oil interests, too, if they weren't such sheep. Energy should not be privately owned. That is the problem. To nationalize U.S. oil interests, under the 5th Amendment to the U.S. Constitution, there would have to be due process of the law (an act of Congress) and just compensation. Make it a campaign issue. Considering the largest national debt in the history of humankind that U.S. taxpayers are forced to pay for the ';security'; this nation is providing for private oil companies in the Middle East, it would certainly be fair for those oil companies to accept no compensation in lieu of the services already provided.
Speaking of communism and the stupidity of sheep, and for the record, the United States is a state-capitalist nation. Risks are socialized (paid for by the taxpayer) but profits are privatized (and extracted by the plutocracy). See the Savings %26amp; Loan scandal, New Orleans after Katrina and Chrysler for more information. The middle class and poor majority creates the wealth of a small minority. That's sick. That's wrong. Considering that, Hugo Chavez would make a FAR better president than the plundering buffoon we have now.Should the Oil companies be allowed to hold consumers hostage to high oil prices when profits are exorbitant?
Yes.
';High'; is a subjective opinion about prices. Similarly, ';exorbitant'; is a subjective opinion about profits. The U.S. oil industry's profits, on a return on equity basis, are in line with other industries. They large in absolute terms because it is a big market.
Cutting back on plans to expand refinery capacity is a sound, logical response to the current climate. Congress wants to increase the availability of substitutes (e.g., ethanol), and there are idiots out there advocating for price caps. Both of these things lessen the expected profitability of new refinery capacity, so it's pretty easy to see why they would cut back on their plans. This is basic economics 101 stuff.
You should check the Government Accountability Office for their analysis. Unlike most members of Congress, they know economics and they get the analysis correct.
If you don't like the profits, you should have invested in oil.
Giving this a ';thumbs down'; is equivalent to saying ';I'm economically illiterate';.
Are you willing to pay that price?
On the Demand side, that's what the price should be.
Sorry, start riding a bike.
I have no doubt that some oil company would try to undercut everyone by building tons of refineries and making their crap cheaper.................IF the government hadn't had such an anti-refinery stance for 3 decades.
Hell No!
Patois's post was brilliant.
The enablers are out in full force and their posts would be laughable if this issue did not anger me and most Americans so much. Quarter after quarter, year after year Exxon and Chevron keep setting new Profit records and this last year deliberately cut production at refineries to artificially keep prices up. Anybody that criticizes this robber barron brand of capitalism is labeled a ';Communist'; by these Corporate enablers with their ';Econ 101'; references.
By the way Iraq was all about Oil. Permanent bases to watch over the Oil spigots, slow down production, prices rise, profits rise.
Now the main ';Benchmark'; Iraq's government must meet to satisfy its Occupiers is to Privatize Oil.
A better question is:
Why are people like yourself so upset with oil company profits when the federal government took $2,300,000,000,000 (that is trillion) of the American people's money last year? Exxon is jealous.
I'm also very glad that ---patois--- responded with her economic buffoonery. People on the left who are sophisticated and nuanced like to pretend that people like her do not exists. Her idea is communism at its finest. Hugo Chavez is proud.
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It's call capitalism, if you want lower gas prices move too a real socialist or communist country. If you can find one.
Its extortion not a hostage situation.
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