Oil Surpasses $57 as Refiners May Struggle to Meet Fuel Demand

[swag]

http://quote.bloomberg.com/apps/news?pid=10000006&sid=aIioUUOVCx_g&refer=home

June 17 (Bloomberg) -- Crude oil topped $57 a barrel in New York for the first time since April on concern refiners may struggle to meet a fourth-quarter peak in demand for winter fuels.

The U.S. and U.K. shut their missions in Lagos, Nigeria, today after a security threat. The country's oil is favored for making heating oil and diesel by U.S. refiners that must produce as much as they can to replenish stockpiles. The extra crude that OPEC can pump is of lower-quality grades that aren't suitable for making these fuels, known as distillates.

``We have a capacity problem that isn't just crude supply,'' said Robert Skinner, director of the Oxford Institute for Energy Studies in the U.K. ``Refiners don't have the kettles and pots to make the light fuels for which demand is growing. It's not so much the availability of crude, but of the right kind of crude.''

Crude oil for July delivery rose 85 cents, or 1.5 percent, to $57.43 a barrel on the New York Mercantile Exchange at 12:46 p.m. London time, less than $1 from a record $58.28 on April 4. Oil, up 49 percent from a year ago, has traded at or above $57 on eight days since the futures contract was introduced in 1983.
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[losdiablosgato]

1. We have been needing to build more refineries for the longest time.

Before you flame. Just listen to two things:

1. Even if a new totally clean renewable energy source came out today and all car makers switched to it tomorrow. It would still take 10 to 15 years for all the current cars to get off the road. And now matter how fuel effeicent a prius is a lot of people will not drive one. These people vote and most (both parties) will not turn the screws on them to hard.

2. This could help the enviroment. I know what you are saying WTF!? But I once worked in the chemical/refining industry in the Housotn area. I kno w a great deal about these plants. I once ran several units. All the old plants are grandfathered in to polution standards that are less stingent then they are now. Building new plants from the ground up could and under the would have the latest in polution controls. To be blunt they would run cleaner and more effecient then the ones today. Win, win for all.

[Deja Q]

2. But they haven't been building them. And there is only one reason.

What's the point after peak occurs?

This is the ultimate case of "infrastructure rot". To exponentially increase while not seeking out new forms of energy. We could have learned from the economically-manipulated energy crisis of the 1970s, but Reagan "thought" other sources were obsolete (WTF? Even if they technically were "obsolete", there's still the fact of economic manipulation, a stunt that had been pulled before. Reagan should have been impeached there and then. And that was 1982, just think of all the scandals that would likely have been avoided.)

[losdiablosgato]

3. Companies have been trying to build them for 20 years

Just have not been able to get the loxcal, state and federal permits. I personall y know of a refinery the wanted to build in MS about 10- 12 years ago that was scrapped because of this.

[Sin]

4. I think

That it would be nice to have one less bottle neck, but oil company's don't this is one way to make the more money also with that they don't want to spend more money on new refineries if oil supply's will start to slow down in years to come why have extra plants that cant work to maximum out put and so forth.
So I don't see any getting built any time soon maybe some smaller ones down the road that can handle the heavy sulfur crude then again they will probably just do a conversion on the old plants for that.

[Nordmadr]

6. You don't build new plants when there won't be crude to process.

That doesn't make financial sense. So instead you pretend there is not a problem for as long as you can. If the companies thought it would profit them to do it, they would, period. The fact that these facilities aren't being built truly speaks to the issue of supply.

Olaf

[TXlib]

8. Not really

That these facilities haven't been built in the past 20 years truly speaks to the regulatory nightmare in doing so.

Regulation in moderation is fine; punitive regulation is asinine.

[Delphinus]

5. I wondered

why gas prices soared by a quarter ... had been without Internet access most of the day yesterday.

[Warren Stupidity]

7. Refinery bullshit crap nonsense

Anything to avoid the reality: cheap oil has reached its production peak. Even while the article is bemoaning the 'refinery capacity problem' it says "The extra crude that OPEC can pump is of lower-quality grades that aren't suitable for making these fuels, known as distillates." The problem with lying is that when you have to fill up the five paragraphs of bullshit that constitute a 'news report' you end up twisted around your own lies.

As pointed out elsewhere - nobody in their right mind is going to invest huge amounts of capital in new refineries when there is not going to be any substantial increase in the supply going into the refineries. Those new refineries, built with all the additional expense required to minimize their toxicity, will be competing with old refineries, already bought and paid for and grandfathered in before environmental regs took effect, for a static supply of crude. Not a winning investment.