Saturday, July 21, 2007

Record Failures at Refineries Raise Gas Prices

New York Times: By JAD MOUAWAD

Oil refineries across the country have been plagued by a record number of fires, power failures, leaks, spills and breakdowns this year, causing dozens of them to shut down temporarily or trim production. The disruptions are helping to drive gasoline prices to highs not seen since last summer’s records....

“You have a system that is taxed to the limit,” said Adam Robinson, an energy research analyst at Lehman Brothers. “This is what happens when spare capacity is eroded.” ...

Many factors have led to the rise in gas prices, including disruptions in oil supplies from places like Nigeria and Norway. But analysts say the refining bottleneck in North America has been one of the main drivers of higher energy prices this year.

The refining crunch has pushed wholesale gasoline prices up 35 percent this year and has contributed to a 23 percent gain for crude oil prices. ...

Some critics of the industry have theorized on Internet blogs that the squeeze on gasoline and other refined products points to a deliberate effort among oil companies to bolster profits by keeping supplies tight. But experts point out that the companies have little incentive right now to hold back on fuel supplies.

Are those the same experts who poo-poohed speculation about market manipulation of electricity and natural gas supplies in California several years back? At moments like this, one's mind turns gently to floating thoughts of Enron...

It’s a marvel we can continue to run refineries the way we do these days given the many requirements and specification changes we have,” said Charles T. Drevna, executive vice president of the refining industry’s main trade group, the National Petrochemical and Refiners Association. “There comes a time when the piper has got to be paid.”

And surely this guy trained at the Enron Institute for Public Communication, with post-graduate work in The Dick's back office. I assume the piper is named "ExxonMobil"?
How about a Congressional investigation into the determinants of domestic refinery capacity over the past generation or so (during which no new refineries have been built)? I expect we'll be told it is the fault of environmental regulation. Unless, of course, the Congressional investigators (both Republicans and Democrats, I would venture to speculate, are so in the pockets of the oil companies that this goes nowhere, slow...

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