Blame Shut down Oil Refineries, Who is shutting them down?

Comment By Bob L.
Sat.02-25-2012

They say that Obama cannot control prices, but he can control how they will operate, and if they do not do what he wants, then he uses the Law, Taxes and Permits to control them. If you look at what is being shut down, you will see that they are the ones that Obama and Gore, along with the White House special interest, are using Environmental Protection Agency to shut them down, so Government is controlling prices at the pump.

They say that Government cannot control prices, but look around, you see signs saying, minimum allowable price, so who is setting that minimum price, and Government sets how much you are allowed to make every time you ask for a pay rise (3%) a year.

But if you looked you would probable see the Governments hand in it, but they say it is because they are losing money with these plants being open, well how about the American worker, are they not losing money with these gas prices keeping them from going to work or finding a job?

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Angry About High Gas Prices? Blame Shuttered Oil Refineries

The U.S. has lost nearly 5 percent of its refining capacity in the past three months, as a handful of old refineries have shut down.

By Matthew Philips | BusinessWeek
Fri.02-24-2012

The average price of gas is up more than10 percent since the start of the year, a point repeatedly made during Wednesday’s Republican Presidential debate. Predictably, the four GOP candidates blamed President Barack Obama for the steep increase.

Actually, the President doesn’t have that kind of pricing power. The more likely reason behind the price increase, though certainly less compelling as a political argument, is the recent spate of refinery closures in the U.S. Over the past year, refineries have faced a classic margin squeeze. Prices for Brent crude have gone up, but demand for gasoline in the U.S. is at a 15-year low. That means refineries haven’t been able to pass on the higher prices to their customers.

As a result, companies have chosen to shut down a handful of large refineries rather than continue to lose money on them. Since December, the U.S. has lost about 4 percent of its refining capacity, says Fadel Gheit, a senior oil and gas analyst for Oppenheimer. That month, two large refineries outside Philadelphia shut down: Sunoco’s plant in Marcus Hook, Pa., and a ConocoPhillips plant in nearby Trainer, Pa. Together they accounted for about 20 percent of all gasoline produced in the Northeast.

[Also see: The over-40 mpg club: Overachievers that beat EPA fuel economy ratings]

This week, Hovensa finished shutting down its refinery in St. Croix. The plant processed 350,000 barrels of crude a day, and yet lost about $1.3 billion over the past three years, or roughly $1 million a day. The St. Croix plant got hit with a double whammy of pricing pressure. Not only did it face higher prices for Brent crude, but it also lacked access to cheap natural gas, a crucial raw material for refineries. Without the advantage of low natural gas prices, which are down 50 percent since June 2011, it’s likely that more refineries would have had to shut down.

The U.S. refining industry is being split in two. On one hand are the older refineries, mostly on the East and Gulf Coasts, that are set up to handle only the higher quality Brent “sweet” crude—the stuff that comes from the Middle East and the North Sea. Brent is easier to refine, though it’s gotten considerably more expensive recently. (Certainly another reason for higher gas prices.)

Then there are the plants able to refine the heavier, dirtier West Texas Intermediate (WTI)—the stuff that comes from Canadian tar sands, the deep water of the Gulf of Mexico, and the newer outposts in North Dakota, which just passed Ecuador in oil production. These refineries tend to be clustered in the Midwest—places such as Oklahoma, Kansas, and outside Chicago. While the price of Brent crude has closed at over $120 a barrel in recent days, WTI is trading at closer to $106. That simple differential is the reason older refineries that can handle only Brent are hemorrhaging cash and shutting down, while refineries that can handle WTI are flourishing.

[Also see: 10 Places Where a Gallon of Gas Is More Expensive Than in the U.S ]

“The U.S. refining industry is undergoing a huge, regional transformation,” says Ben Brockwell, a director at Oil Price Information Services. “If you look at refinery utilization rates in the Midwest and Great Lakes areas, they’re running at close to 95 percent capacity, and on the East Coast it’s more like 60 percent,” he says.

This is primarily why the cheapest gas prices in the country are found in such states as Colorado, Utah, Montana, and New Mexico, while New York, Connecticut, and Washington, D.C., have some of the highest prices.

More from Businessweek:
Resource Crunch: Why Many Things Cost Much More
Rising Gas Prices: Not Demand Driven
How to Defuse Political Peril of Surging Gas Prices: Ron Klain

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Categories: America, Cap & Tax, Corruption, Democrats, GREED, Jobs, money, Obama, people, politics, taxes, White House | Tags: , , , , , , | Leave a comment

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