Energy Execs Tell Granholm Shuttered U.S. Oil Refineries Won't Restart
By: Julianne Geiger (OilPrice. com)
Meanwhile back at the ranch ...
So, who is Biden going to throw under the bus this time?
S E E D E D C O N T E N T
U.S. energy executives told Jennifer Granholm that shuttered crude oil refineries won't restart, Valero's Chief Executive Joe Gorder said on Tuesday.
The comments were made to the U.S. Energy Secretary at a recent White House meeting with energy executives, Reuters reported on Tuesday.
"The one interesting thing that came out of it, too, was there was consideration for the ability to restart refining capacity that had been shut down, and I think the general sentiment was that wasn't going to happen," Gorder said.
Limited U.S. refinery capacity—and perhaps more critically, refinery capacity in specific U.S. geographic areas, known as PADDs—has spared worry in the United States over high gasoline prices and energy security.
US refinery run rates were north of 90% for much of the summer, according to the EIA's Weekly Petroleum Status Report.
Shuttered refineries unlikely to start back up are the latest nail in the U.S. refinery coffin. In June, Chevron CEO Mike Wirth posited that there would never be another new refinery built in the United States.
"Building a refinery is a multi-billion dollar investment. It may take a decade. We haven't had a refinery built in the United States since the 1970s. My personal view is that there will never be another refinery built in the United States," Wirth said at the time.
Oil and gas companies would have to weigh the benefits of committing capital ten years out that will need decades to offer a return to shareholders "in a policy environment where governments around the world are saying 'we don't want these products to be used in the future,'" Wirth added.
Refinery utilization in the United States for the week ending October 14 was 89.5% of their operable capacity, the most recent EIA data shows.
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Lack of planning has created a crisis for everyone. Here's an idea, let NIMBY environmentalists carry the burden this time. But we know Biden won't throw those responsible for this mess under the bus.
That's a lot of lack of planning!
Corporations don't have an endless line to capital like the US government has. They can't run trillion dollar deficits.
The US government has made building, operating, and maintaining a refinery too damn expensive. Then they act shocked when corporations refuse to invest in new capacity.
So the government should give more money to companies that are making record profits?
hmmm... those poor, poor CEOs with their yachts and mansions. Life is so hard for them.
It's a bitch when you're no longer allowed to dump your toxic waste in the nearest river, isn't it?
No Oz, we have to give more tax payer money to bid oil for their operational costs and then spend even more when they cause an ecological disaster. You know 'cuz... oh fuck I don't know why... Ronin2 said so.
It's almost funny right after all the articles trying to tie government spending to inflation.
Yes, it is a lot of lack of planning. That's the status quo Biden is trying to revive. Biden is trying to deal with the current crisis as though it is still the 1970s. Biden is looking to foreign producers to fix the problem caused by lack of planning. But the problem isn't too little oil; the problem is too little refining capacity. Importing more oil won't help because this isn't the 1970s.
Biden's 1970s fix ain't going to work.
That's the status quo of capitalism since the 80's when the Chamber of Commerce moved from small town America to become a lobbying force under Reagan and the Republicans. That doesn't excuse the Democrats sucking up to big business either - everyone leaves Congress richer than they came in.
Biden has no choice because US companies don't produce the crude needed to refine US gasoline. YOU know that. Everything in Washington is about the next election cycle. That ain't new news either.
It certainly isn't the 1970's. Big oil is diversifying into other more efficient and less toxic areas of energy development.
Is that what the people who make money off right wing populists are telling you?
Is that a direct quote from the talking points email or do you have an actual link with a quote to back this partisan shit up?
You should bring up Keystone and permits again, but really mean it this time.
Yes, that IS the status quo that Biden is trying to revive. Biden is trying to follow Clinton economics. But that status quo really was broken by Biden's predecessor.
The United States is not experiencing an oil shortage. The problem is not the supply of oil for the United States. Last year the United States was exporting 3 million barrels per day of crude oil.
Oil exports balance oil imports; essentially an even trade for crude that our currently operating refineries are designed to process. The government's oil reserve isn't necessarily the type of crude that currently operating refineries can process, so Biden tapping those reserves won't actually help domestic refining that much.
The refineries that have been shuttered were designed to process grades of petroleum that requires more operating costs to comply with environmental regulations. The United States is losing refining capacity for handling lower grades of petroleum because of the increased costs to comply with regulations.
Delta Airlines has purchased and is operating its own refinery. Delta Airlines is certainly not Big Oil. And Delta Airline's experience with the operation hasn't gone according to plan, either.
Big Oil has been looking at carbon capture and sequestration. That makes sense because oil is not going away. There is going to be demand for oil and petroleum distillates far into the future. The government may kill off the fuel market but not all oil is used for fuel. Even EVs need bitumen paved roads and petroleum based tires.
As usual you keep moving around points, even contradicting yourself.
As I have repeatedly noted, energy executives have made business decisions that translate into NOT fully using their existing capacity and NOT building new capacity because they see the world market for fossil fuels waning.
And they are making record-breaking profits. Exxon Mobil just recorded it's highest quarterly net profit in history, 18 billion dollars.
While the blindly-partisan-challenged ignorantly chant : "must blame Biden".
Exactly and in addition a number of oil company executives said it in very simple terms...''it's wall street stupid''...Return to investors at record levels as are stock buybacks...The oil companies have every reason to NOT increase production.
Biden has no influence on policy making? Biden has no influence on the regulatory environment?
The Keystone XL pipeline is an example of how government policy (and politics) affects business economic planning and investments. Keystone XL became a political football that had nothing to do with planning or market needs or economics. Businesses cannot plan long-term investments in that sort of political environment.
Biden has made a political decision to convert auto manufacturing to EVs. Economics was not a critical aspect of Biden's political decision. Biden expects businesses to do the economic planning to make Biden's politics work. The decisions are not being made based on consumer demand, technical development, or future economics. Business planning is being forced to conform to a political decision enforced by the government's regulatory environment. The government can impose regulations to favor one type of product and disfavor another. And the government's imposition of regulations does not consider economic factors. The government cannot even set its own budget and control its own spending so it's clear the government isn't in a position to manage business decisions.
Even if the oil businesses wanted to build new refineries, it is doubtful the government would let them. The government really does short circuit business economic and technical planning with a regulatory environment that prioritizes political decision making.
Of course he influences policy-making; why do you twist what I write? And Biden could even influence energy executives. I doubt, however, that it is possible to convince energy executives to invest countless billions in a future market that they do not believe will ever exist.
Was not even operational. Do you think that continuing the pipeline would cause the executives to see a future market for global fossil fuel energy?
He has insufficient power to cause auto manufacturers (especially worldwide) to convert to EVs. This is a global trend ... a market force. You attribute way too much power to the office of the presidency.
Irrelevant. The point is that the business executives make business decisions based on the circumstances. In this case, they are looking at a global market trend. Renewables will continue to displace fossil fuels and energy companies will (if competent) go with rather than attempt to buck the flow.
Then there is a rationale for blaming Biden. You implied that blaming Biden is only motivated by blindly-partisan-challenged ignorance.
We all know that oil is not going away and we all know that the market for petroleum distillates will continue far into the future. Business planning will be based upon forecasts for that future market. We also know that Biden has established policy and regulatory guidance that curtails some existing markets for petroleum products. But don't gloss over the fact that Biden's policy and regulatory guidance has predicated the future market and not economics, consumer demand, technical developments, or any other economic factors.
Biden has established policy that curtails future markets for fossil fuels. And Biden's policy has prioritized factors other than economics. Biden's policy has been based upon blue-sky projections based on technical developments that haven't occurred yet. Biden is attempting to artificially create a market while ignoring the economic and technical factors.
Not in the current political, policy, and regulatory environment. A political decision has been made to force changes to the fossil fuel market through policy and regulatory guidance. The government is not going to produce and distribute alternative energy any more than the government produces and distributes fossil fuels. But the government will impose itself onto the marketplace using artificially generated factors intended to manipulate business planning and investments.
That's simply not true. Biden can impose unachievable efficiency, emission, and safety standards that prohibits manufacture of ICE vehicles.
EVs have been on the market for several decades. There were a number of hybrid-electric and all electric vehicles available 20 years ago. There has been research and development on fuel cells, hydrogen combustion, and other alternatives since the 1970s. The government has made a political decision to favor battery powered EVs based upon political motivations and not based upon economic and technical factors. The global trend is being driven by politics and not by economics.
Business executives make plans based on forecasts of future circumstances. Governments respond to current circumstances motivated by near-term political consequences. Governments don't plan; governments react.
Proportionally. I was referring to people who simply and ignorantly blame Biden and leave it at that. Surely you understood that from the language I used:
(hint: 'blindly-partisan-challenged ignorantly chant')
No he cannot. That would take an act of Congress AND it would apply only the USA (i.e. not the world market). Further, an act of Congress (signed into law by the PotUS) that is as irrational as you indicate would produce political backlash. Our government is not a monarchy or a dictatorship so the natural constraints of democracy still apply.
The comment you quoted said nothing about governments so you are again in a non-sequitur. Your first sentence simply repeats my point.
Do you think this refutes my point?
“I want you to look at my eyes. I guarantee you. I guarantee you. We’re going to end fossil fuel.”- Candidate Biden 2020
"Read my lips; no new taxes."
What point are you trying to make? Are you in some round-about way suggesting that Biden can control the world market for energy?
That isn't any quote of mine, why make it appear as if it might be?
Of course not. The topic is building new US refineries or not. Why invest so much money and time when the country is committed to eliminating the market.
It was a paste mistake. I meant to include your quote.
Then what, exactly, is your point?
That it is the policy of the US to reduce and then eliminate the domestic demand for fossil fuel and to work with others to reduce the world demand. Given that and the time and expense to build a large refinery, it risking that the benefit (profit) would outweigh the cost.
Yes the USA is definitely part of the global movement away from fossil fuel. And this worldwide movement determines the market for said fuel and thus dissuades energy executives from investing billions for a market that they are convinced will not exist.
Are you making a point that is different from what I have described in my comments in this seed?
Saw this...
Even oil producing nations like Saudi Arabia Are having a position of investing in different forms of energy.
It is like you said a worldwide movement.
Even visibly, visit Europe and see the massive number of wind and solar farms.
It makes sense in terms of the climate but it also makes long-term economic sense. It will eventually be much cheaper to simply extract energy from natural forces and radiation than to explore, mine, process and vaporize fossil fuels. With an incessant hunger for more energy, we absolutely need renewables to keep up with the demand trajectories.
No, you’ve got it.