Also neat!
Production is different from refining capacity. Which is the question I answered.
None the less, it's interesting that the feral government agency numbers on production differ from the energy industry itself.
Fuel prices
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Production is different from refining capacity. Which is the question I answered.
None the less, it's interesting that the feral government agency numbers on production differ from the energy industry itself.
fried1765
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$6.10, the October JB new normal ???Just saw a report on watters world that a local guy from nazareth PA just got 77 gallons of fuel oil delivered for $470.
quick math says $6.10/gal
Just wait for Jan. & Feb. !!!
We have always done this and always will. We have covered this before, there are REASONS why we export some crudes and import others. But those who do not understand the intricacies of the petroleum market and the refining capabilities in the U.S. just parrot the narrative that it is 'Big Oil' Greed.
First of all....it is a Free Market (that is a good thing) and no entity selling crude is committed or required in any way to keep all production domestic.
With respect to economics....sellers will naturally want to make the most profit, so sell to markets paying the most. Some have prior commitments to fulfill as well.
From a strictly chemical standpoint (and again we have covered this) there are two basic metrics to remember concerning crude oil. There is light/sweet crude oil (easiest to refine for certain types of fuels) there is heavy/sour crude.
For many decades...the U.S. has imported heavy crude to refine. It is much cheaper (even after shipping) for a variety of reasons. So....most of our refineries (though this is slowly changing) were/are set up to process heavy crude. The process is different for each type.
Domestic Crude is mostly Light/Sweet crude, so we export some of that, refine some of it (what we can).
But in no way are we set up to just "keep it all at home and everything will be OK".
The petroleum industry/market is incredibly complicated. There are a myriad of Economic, Chemical and even Geopolitical elements at play.
As a nation we are woefully unprepared to refine what we produce domestically. Other countries have vastly lower 'Lifting Costs' (the cost in aggregate to recover the oil). They don't have the same labor costs, restrictions, regulations...etc. So.....unless or until new refineries are built here, old ones renovated/restructured to refine either type of crude we will continue to struggle to meet our demands.
When you are already teetering on the edge...it doesn't help to have additional stumbling blocks placed in your way....in the from of increased leasing prices, permitting issues, restrictions and regulations.
'Big Oil' is not about to invest Billions on that uncertain future. And yes, this did not just happen in the last two years. It just got much WORSE in that time period.
jyoutz
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You size up of the situation is correct. But the boom in Permian basin light sweet crude has been ongoing for the past decade. The Bush administration was very favorable to US oil but industry did not build new refineries to process it, except for local refineries like we actually have in the Permian Basin (not the huge Gulf Coast operations). As you acknowledge, it’s cheaper to buy heavy crude from abroad than to process our own oil. This demonstrates that there is no economic incentives to build refineries to process This is unfortunate because the Permian basin contains the largest known oil resources in the world. The refineries in my state process it, but that supplies only regional markets.
What are you drinking..?? Oil Company profits are the highest EVER! ….and continue to rise as Americans suffer high prices! Do a little RESEARCH!
”Exxon alone reported a profit of $17.9 billion – the highest quarterly profit reported by any oil company in history – while Chevron reported $11.6 billion, Shell reported $11.47 billion, and BP reported $8.45 billion
Not drinking anything.
PRODUCTION.....I'm talking production (refined fuels), NOT profit. I could care less what profits Exxon (or others are making). The market will bear it or it will not. No research needed.
GreensvilleJay
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re: ... First of all....it is a Free Market
not really a 'free' market as we ( citizens of Canada and USA ) MUST pay 'World Market' prices for oil and gas.
seems oil companies cannot sell 'locally' for less than 'World market' prices...
never understood why I can't buy the nat gas or oil pulled out of the ground 100 miles away CHEAPER than when 'they' pump 1,000 miles away, or refine the oil, then ship 1/2 way round the world.
ain't no way it's a 'free market'....
BTW gas went from $1.58 to $1.77, 'magically' overnight.........
.hmmmmm.... must mean the weekend is near...
not really a 'free' market as we ( citizens of Canada and USA ) MUST pay 'World Market' prices for oil and gas.
seems oil companies cannot sell 'locally' for less than 'World market' prices...
never understood why I can't buy the nat gas or oil pulled out of the ground 100 miles away CHEAPER than when 'they' pump 1,000 miles away, or refine the oil, then ship 1/2 way round the world.
ain't no way it's a 'free market'....
BTW gas went from $1.58 to $1.77, 'magically' overnight.........
.hmmmmm.... must mean the weekend is near...
The 'industry' has to deal with investments that don't realize a 'payout' for about a DECADE. Who wants to be the first to go to your shareholders and solicit their support for that? THAT is one reason there hasn't been a new refinery (large one) built in decades. Oil Companies (like all others) are accountable and beholding to their shareholders.
Indeed there have been economic climates in the past more favorable to refinery expansion. But for many reasons (some good, some not) it wasn't done. Now... that ship has pretty much sailed. I can't imagine any new (large) refineries being built in today's climate. The cost and ever increasing restrictions are just prohibitive.
There is also the need for U.S. refineries (as they stand now) to remain flexible in the World Market. Please remember...while the focus has been on fuel production (made most easily from Light/Sweet crude), many other products are better made from Heavy Crude. Another reason U.S. refineries in the past were/are geared to process the way they do.
So we can't just reconfigure existing refineries to handle Light/Sweet crude (focusing on fuel production) without cutting the economic legs out from under the other aspects of the industry (Oil, Grease, Lubricants, Waxes, Plastics, etc...).
The petroleum world is complex in terms of production, importing, exporting and refining, its a balancing act (this is the teetering I alluded to... GeoHorn). Currently...the U.S. finds itself with high demand for refined fuels and does not have the capacity to produce it entirely ourselves. Supply and Demand along with production costs will always dictate pricing.
Another one is going down. LyondellBasell is shutting down their Houston refinery by YE '23. If they have an unplanned glitch, it could be sooner; they're not putting major $ into another turnaround.
This was originally a Sinclair refinery, built in 1918. Major modifications were made in the '70s for Alaskan crude by ARCO and in the '90s by Lyondell and Citgo for Venezuelan crude. There's been talk of selling or shutting down for 30+ years, I guess LB finally had enough.
You pay the same transportation fee for your car whether you live in Detroit or in NYC. Where the car was built has nothing to do with the transportation fees any longer. They are averaged out so everyone pays the same no matter where the commodity originates from. Same with petroleum products.
Meanwhile....China is building at least 4 Mega-Refineries....that will be able to produce both fuels and pertro-chemicals.
Currently, they export little....smartly using what they produce domestically, but make no mistake, in the future they will be a geo-political giant in that field. They always look ahead and play the long game.
Of course, many factors affect prices—the pandemic, supply chain disruptions, and the war in Ukraine, to name a few. But because of excessive corporate power and consolidation, and financial markets designed to maximize short-term profits, big corporations with huge market power don't think twice about extracting ever more profit to line the pockets of their CEOs and shareholders. The proof? They're now seeing the highest profit margins since 1950, thanks largely to massive price markups.
No… you were specifically talking about “teetering on the edge”…as if oil companies are somehow endangered species.
And…In your post #971 You directly contradict your own comments in #966. You can’t claim in 966 that we are mostly set up for “heavy/sour crude” and then in 971 claim most of our production is set up for “light/sweet crude”… or similarly contradict yourself in your other major points.
The ACTUAL REASON refiners are slow to construct new refineries is because of environmental and MARKET concerns in economies that are heading toward a REDUCTION in use of fossil fuels. (or at least make that claim.)
You can’t convince me to feel sorry for Big Oil when they make the profits they do from sucking minerals out of public lands and selling them for the profits already shown…while also receiving “depletion allowances” and subsidies.
Big Oil needs to act like responsible citizens (like they claim to be as corporations).
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I helped build additions to that refinery in 1967-68 as an IBEW apprentice.
However, if you read Lyondells’ report to stockholders you’ll get a completely DIFFERENT picture of their business…having made only $1.7 Billion in profits last QTR.
LyondellBasell Reports Third Quarter 2022 Earnings
www.lyondellbasell.com
Their “plans” to shutter that refinery are not because they are losing money there. It’s because they anticipate a huge profit on its’ SALE.
^^^^^No… you were specifically talking about “teetering on the edge”…as if oil companies are somehow endangered species.
Don't tell me (the person who wrote the response) what I meant. I was speaking directly to our ability/inability to refine for fuel products vs. current demand. 'Being able to keep up' if that makes simpler for you. We are very much at the teetering point.
And…In your post #971 You directly contradict your own comments in #966. You can’t claim in 966 that we are mostly set up for “heavy/sour crude” and then in 971 claim most of our production is set up for “light/sweet crude”… or similarly contradict yourself in your other major points.
Go back and re-read it. I think you must have reading comprehension difficulties. I did NOT say our production is 'set up' of light/sweet crude. Never have. In fact I am pointing out we are NOT set up for it.
I was making the point while current 'focus' is for more 'FUEL' (which is most easily made from light/sweet, something we are not well geared up for) we should not forget the other products that are made from crude and I go on to expand on that. Sheesh....man, slow down, cool your jets and read CAREFULLY.
You can’t convince me to feel sorry for Big Oil when they make the profits they do from sucking minerals out of public lands and selling them for the profits already shown…while also receiving “depletion allowances” and subsidies.
No one trying to make you feel one way or another. An impossibility anyway...as you have your mind made up.
Big Oil needs to act like responsible citizens (like they claim to be as corporations).
Buy their stock to a point where you have a voice and go talk to them about it. I've no doubt you'll persuade them one direction or the other given your keen understanding of the industry.
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I helped build additions to that refinery in 1967-68 as an IBEW apprentice.
However, if you read Lyondells’ report to stockholders you’ll get a completely DIFFERENT picture of their business…having made only $1.7 Billion in profits last QTR.
LyondellBasell Reports Third Quarter 2022 Earnings
www.lyondellbasell.com
Their “plans” to shutter that refinery are not because they are losing money there. It’s because they anticipate a huge profit on its’ SALE.
News Flash: The whole purpose of a successful business (other than not for profit companies) IS TO MAKE A PROFIT!
dirtydeed
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I don't think that the margins being observed in todays climate are the norm for petroleum companies. I had always heard that they ran in the 10-15% range. They are very large companies and as such, profits in the $B range shouldn't be cause for concern.
Maybe we should be looking into the profit margins of other companies like apple and big pharma etc. Granted, they do produce something as well.
lastly, what about the margins for companies like twitter and google (and the "non-profits" like NFL and universities)...somewhere in the 40% range? And just what do the actually produce? Can you burn their product in your tractor?
The current administration made it perfectly clear what their agenda was regarding big oil before they were elected. As they say, elections have consequences.
We're all going to have to suck it up...or don't drive.
Maybe we should be looking into the profit margins of other companies like apple and big pharma etc. Granted, they do produce something as well.
lastly, what about the margins for companies like twitter and google (and the "non-profits" like NFL and universities)...somewhere in the 40% range? And just what do the actually produce? Can you burn their product in your tractor?
The current administration made it perfectly clear what their agenda was regarding big oil before they were elected. As they say, elections have consequences.
We're all going to have to suck it up...or don't drive.
Everyone makes it sound like profits are immoral. If it weren't for business, we all would be farmers growing our own food, and society as we presently know it wouldn't exist. All the liberals that I know are anti business, but they have huge holdings in the stock market in their 401K pension plans.