Oil companies look at permanent refinery cutbacks

[liberal N proud]

Some of the nation's biggest oil companies are looking at permanently reducing how much gasoline and diesel fuel they make, a move that analysts say would almost certainly trigger higher prices for drivers.

Energy companies are suffering huge losses from refining because of slumping gasoline use -- a product of the economic downturn and changing consumer habits and preferences. Energy experts say refining cutbacks have begun and will accelerate as corporations strive for profits.

Major refiners have been circumspect about their plans, saying that they are considering options that could include closing refineries, selling parts of their operations, laying off workers and slashing spending.

"Refineries will have to be closed," said Fadel Gheit, senior energy analyst with Oppenheimer & Co. "Unless this excess capacity is permanently shuttered, a recovery in refining margins is unsustainable."

This week Chevron Corp. launched an overhaul of its fuel-making and retailing business with a plan to cut at least 2,000 jobs, put a refinery in Wales up for sale and take a hard look at its Hawaii refinery.

http://www.latimes.com/news/la-fi-refineries11-2010mar11,0,2712150.story?track=ntothtml

[HereSince1628]

1. This would be expected after peak oil is seen within the planning horizon

I'm not saying it won;t raise prices in the same way that gouging would, but at some point putting more money into refining capacity won't provide a reasonable return.

[NeoGreen]

2. This seems shortsighted from a long-term profit...

point of view, since higher prices will drive even more conservation and reductions in consumption, and thus reductions in profits.

Unless the real reason for reduced production is not a reduction in consumption but a anticipated reduction in the availability of crude oil.

If in the near future, refineries will be running at reduced capacity because there will be significant reductions in the feed stock, you might as well start the meme that it is all because of reduced consumption. Don't want to panic the proles with the realities of Peak Oil, when you can blame them for the problems it causes.

[liberal N proud]

3. Reduction is our fault propaganda

I see where you are coming from.

Because we are conserving and using less they will produce less and then the demand goes up so the price goes higher.

They can't lose, can they?

[NeoGreen]

4. Rhetorical? If not, then I would say that yes they can lose if...

we continue to reduce consumption (increased efficiency, increase use of alternatives) regardless of what happens with crude oil supply. That way, it will be more more difficult for them to cause boom/bust cycles. Booms help them make mega profits and busts help them kill the alternatives and maintain control of the energy sector. By continually reducing our need for fossil fuels with reduce their capacity to control the sector.

If however, we do not continually reduce our consumption of crude oil, then they will remain in the drivers seat (pun intended) and by setting refining capacity to just barely match consumption they can ensure control of the boom/bust cycle and maintain a maximized extraction of wealth from the consumer class over the long term. All the while blaming the consumer for creating the problem.

[tibbiit]

5. It pisses me off everytime

I read about how the enviornmentalist hippie liberals have caused the Oil companies to NOT build refinneries, when in fact they (OIL COMPanies) have been the ones to close them down or not build them because of Profit! NOt enviornmental wackos like they say.
tib

[liberal N proud]

9. Under everything corporate there is one common factor

GREED!

[ThomWV]

6. Lack of refinery capacity is the major tool producers used to justify excessive price

and you will see a spike in gas prices every spring when they "shut down"refineries for annual maintenance - something the article implies they will make permanent. You'd expect no less from them.

[Mari333]

7. didnt I just read yesterday on here that IBM has created an organic alternative

to oil products for packaging? bio friendly?

these assholes will do anything to continue their profits.

in the meantime, the cost of everything will raise..plastic is made from oil

shipping requires oil


the costs will be sent down the pike to the poor of the world

and no one seems to care how much the rest of us get fucked.

[hunter]

8. Peak Oil. It's already starting to hurt.

We'll never be able to pump oil out of the ground at a higher rate than we are now, and this rate will decline.

Basing an international economy and civilization on oil was an utterly absurd thing to do.

Silly humans.

[theophilus]

10. Well then, time to Nationalize the industry. If the government builds and operates

some refineries then we can transition without undue hardship on us "little guys". I welcome the pressure to get off the oil teat, but I don't think the middle and lower classes need to take yet another economic hit. I detest the oil industry. They should be punished severely, imo.

[lunatica]

11. Here's an idea. Maybe they should start looking into alternative energy

Since they're willing to shut down just to keep making a profit, imagine what they could make if they actually developed alternate forms of energy.