Oil companies limited refining capacity to make more money???

[bunny_power]

Some consumer watchdog group got ahold of some internal memos that make it look like the oil companies wanted to reduce their refining capacities so they could increase the price of gas and thereby make a higher profit margin. This stuff would contradict all those claims we've been hearing for years and years about how one of the reasons the cost of gas/oil is so high is because no refineries had been built. :shrug:

http://www.consumerwatchdog.org/energy/fs/

Mobil Memo
http://www.consumerwatchdog.org/energy/fs/5105.pdf

Texaco Memo
http://www.consumerwatchdog.org/energy/fs/5104.pdf

Chevron Memo
http://www.consumerwatchdog.org/energy/fs/5103.pdf

 

[Steeltwo]

if this is a news flash to anyone, they need to get their head out of the sand.

 

[poopnut2]

Duh..............................

Happened in the 70's and it's happening again. It'll go back down.

 

[JDV]

I was only able to read the Mobile one. But what i saw there isnt a consipiracy. It is notes about what would happen if a plant where exempted from rules, how much more they would make. etc. Also, it is dated 2001. Remember, gas was cheap then.

I can assure you, most of the current problem is the fact that so many HUGE refineries are down at the moment due to Katrina. 8 in south louisiana alone where down, with only 1 running again. It is at full capacity (my brother is a Mech Eng there) and loading roughly twice its normal capacity. Ill copy the note he sent me and post here. The industry in South LA is doing what it can, but power and access is a huge problem to overcome at this time.

BTW, i know 2 more are ready to start up, but are waiting for employee access to get em going again.

__________________________________________________________________________

Here is the note i received. I cut out all headers, names, etc to protect the innocent. I also cut out the brand, because it doesnt matter at the time. With power, raw materials, heat, etc all at a premium at the time, its still more expensive to produce gas. Although, i do think it is still overpriced (obvious by the record profits of the companies), it is obvious that the companies are doing thier best to ensure supplies are flowing. Keep in mind also, that even if the margin for profit per gallon stays the same, profits will grow due to a much increased demand over the last few years. As generators in the affected areas go down *as power comes up* supplies will increase and prices will fall accordingly *as evidenced by the recent drop after the spike immediatly after the Hurricane*. B4efore you flame me. I am in the chemical industry, and do understand the way it works. Generally, our profit margins stay the same xx $'s per pound. the more we make, the more we make. As demand increase, so does our profit. The oil industry works the same way. I am with you all though, i wish prices would go down. The optimum way would be for raw material prices to drop, therefore the at the pump price would drop, and the stock market would still soar because of company profits.

Here is the note: Notice no mention of price, profit, etc. Their priority at the time is to get the supplies flowing (also came from Brothers mouth who is under direction to keep the refineries going)

----------------------------------------------------------------------------------
By the way, "mogas" is gasoline.

"The Refinery has raised rates to maximum over the weekend after starting
up the two idled pipestills. The **** continues to operate and the
*********** River has been opened to traffic during daylight hours
including deep draft vessels..

The refinery is in a maximum mogas blending mode. Chemicals operations have
been adjusted to assist in this mode (nonene to mogas, BPLA cutback).
Tankers are being loaded at the rack at maximum possible rates at 1,700,000
gallons per day which is three times the typical rate. The fuel is being
supplied to all service stations in the area including competitors. Several
other racks are coming into operation as other refineries are restarted."

*in case you are wondering, that means that chem plants that use oil as a raw material have cut rates to ensure more supplies for the refineries. Chemical operations generally make much more money (1.50 per pound, versus about about 50 cents per pound for gas at 3.00/gal). They could make more money making chemicals out of the stuff than gas, but you see whats going on?*

 

[bunny_power]

I was only able to read the Mobile one. But what i saw there isnt a consipiracy. It is notes about what would happen if a plant where exempted from rules, how much more they would make. etc. Also, it is dated 2001. Remember, gas was cheap then.

I can assure you, most of the current problem is the fact that so many HUGE refineries are down at the moment due to Katrina. 8 in south louisiana alone where down, with only 1 running again. It is at full capacity (my brother is a Mech Eng there) and loading roughly twice its normal capacity. Ill copy the note he sent me and post here. The industry in South LA is doing what it can, but power and access is a huge problem to overcome at this time.

I wasn't even thinking about Katrina or the cost of gas in 2001 (but I imagine everyone bitched about the high cost then just as much as they do now)... I posted this because we've been hearing for years about the refining capacity issue, its not like this just started last week. :shrug: