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Britestar

Has anyone noticed all the news lately about oil refineries being shutdown for routine maintenance?

Martha:

oil prices or the fear factor

Britestar:

I follow business news and this is a recent phenomenon. They never cared when the prices were low, but, now, anything to keep prices high is harped on. I can understand increased interest, but refinery shutdowns are planned, necessary events, that have been around since refineries began. It's getting ridicules.

Martha:

i live on the doorstep of one of the biggest refinerys in europe they have a two week shutdown every year but the prices hear don't change

Hunta:

nop, probably a tactic keep the oil prices high.

Angiemaritza:

Absolutly, no other way to look at it.

Jeweldane:

sorry you are wrong & you could walk or ride a bicycle if if troubles you enough. beat'em at their own game, don't play!

Hunta:

Hey Jim,

I might be wrong but I never said I owned a car, or bus or van or any engine driven vehicle.

Globally Interested:

This is the normal maintenance season; just before the peak driving period. Some of the refineries run into problems and so get behind schedule. The same thing happened last year.

In addition, Valero, the nations largest refiner, had a fire at one of their refineries.

Aditya:

Same as last year... just like the record breaking profits!

Globally Interested:

There seems to be a lot of complaining about the oil companies profits. Of course the dollar number is large. After all the have a large number of customers. Millions of people every day. However, their profit margin is less than 12%.

I did a search for companies with over 25% profit margin and came up with 328 companies. That included companies like Qualcomm, Owens Corning, Google, Kaiser Aluminum, and Imclone. I don'y hear anybody hollering about their profits.

Britestar:

I've often worked in Valero refineries. The profit margins for oil refineries should be compared to the bulk chemical industries. That's basically what they are. The same criteria was used in locating them, before they were built. I've grown used to refinery fires from years of being around them. I checked into the Valero fire when it happened and saw it was no big deal. This stuff is too routine to warrant concern, unless the intent is to increase the price of summer gasoline. The refineries have had a history of concealing their fires, not advertising them. Those tankers roll into a present day refinery and fill up with gasoline designed to a different brand name at the same pump. Refineries are no longer for a specific brands of gasoline and they make many more products than that. They are bulk chemical production facilities whose raw material mostly spews from the ground. Their crying is fake and the tears in their eyes are from laughing at a misinformed public. There are no free market forces to keep them in check, because they are the market.

Globally Interested:

Profit margin for Ceredyne is 19% and for Potash it is 23%.

You can expect high margins on nitrogen based fertilizer companies this fall.

Britestar:

Hello dunrunnin. Fertilizers are not produced in bulk chemical plants of a refinery type. Try polypropylene, polyethylene, nylon, insecticides, herbicides and paint pigments, to name a few. Many of the chemicals are petroleum based and the prices are inflated by the oil companies. What people don't understand is once the plumbing is there to produce the chemical, the unit price is drastically reduced with demand. It takes the same effort to turn a valve to full, basically. Fluid dynamics is doing the work for you. You have enough business sense to know the price of corn, fertilizer and ethanol will eventually drop and the unit price will be less than the original. The current increase in price of corn will not sustain itself in a dynamic free market. Crude is different.
I enjoy being in chemical facilities, and they look complicated, but they aren't. Refineries aren't even very complicated in the chemicals involved. They love to be ran at capacity, and experience less problems when done so. Damage is done during heat up and cool down. They are money printing presses that need watching and pretty much left alone, as far as operations goes.
From what I've seen of your business answers, I believe you know more about industry comparisons in business than your comments indicate. If your looking for a model of the oil industry try comparing with the military industrial complex of the Eisenhower administration. The oil industry will not go the way of the whale oil industry, but will fight for it's life. Take care.

Globally Interested:

My industry comparisons are based on earnings, revenues, profit margins, and return on equity. Also several other numbers and ratios. What I see for the oil companis are good numbers. Not that much ahead of some other industries and well others.

The greatest cost in producing gasoline is the price of oil. The price of oil is determined by free market style bidding and not by the oill companies or the oil producing countries.

Current global oil production is about 85 million barrels a day. Boone Pickes, a foremost authority on oil, estimates that global demand will surpass 86 million by the end of this year.

I have yet to hear anybody give an estimate as to the total cost to the American public of ethanol. I do not mean just the price of fuel; I mean including the price food. In spite of the fact that we are planting over 93 million acres of corn this year, the price of corn has already almost doubled the price a year ago. What is going to happen to the price of pork, beef, and all products using corn syrup.

Also, the distribution system can not use existing pipelines. Ethanol from corn is too corrosive. It will need to be shipped by truck and rail. Buffet knew what he was doing when he heavily invested in railroads recently.

By the way. Soy products prices will be going up also since several acres that used to be soy beans will now be corn.

Ethanol will be a creeping economic disaster (just my opinion).

Globally Interested:

rewrite
from: Not that much ahead of some other industries and well others.

to: Not that much ahead of some other industries and well behind some others others.

Britestar:

My industry comparisons are based on type of industry, which is the accepted method of evaluating a companies performance. Oil refineries are plants that produce chemicals, and fairly simple chemicals at that. Qualcomm and google hardly qualify.

Pointing out the corrosive properties of ethanol and not pointing out that it only the water content that is corrosive is part of the misinformation problem, because people know you can transport water in pipelines. Pipelines exist to help transport crude from oil fields to oil refineries. It is a fact that crude oil travels only a small percentage of it's necessary distance in pipelines, and the pipeline would be poorly placed for practical use in ethanol distribution. Gasoline is too dangerous to be transported in pipelines and is transported by barges and tankers on the open highways. Ethanol can be transported safely by any means including rail. Boone Pickens is warning that the oil industry may not be able to keep up with world demand, based on his assessment of easy to obtain crude. Our country has always been able to produce more agricultural products than it needed, and the government has paid farm subsidies not to produce corn and storage costs for excess corn. It is a fact, that the majority of farm subsidies go to the very rich and are not to aid the small farmer. It is a fact that machinery costs are a major expense in corn production, and the unit price of production will decrease by added production. It is in the best interest of our country to rid ourselves of our dependence on foreign oil, and with advances in producing ethanol from cellulose (within 10 years), we could do our summertime traveling off of lawn clippings.

Ethanol will be a creeping economic disaster to the oil industry, and not our country (just my opinion).

Globally Interested:

I agree. Ethanol from cellulose could be an answer to our foreign oil dependence. In the meantime, corn ethanol is merely going to raise both gas and food prices.

But, we have strayed from the point. I was not comparing profits with different companies for the purpose of investment. That would be foolhardy. My comparison was for the purpose of showing that oil company profits are not out of line.

Congress, once again this year, is mumbling about a profit tax on oil companies. I still prefer the free market economy.

SusanliarnoldVIXIV:

Oh this is the reason that the Gas station hiring now people for the price signs..... To keep up with the prices. Job Descriptions says you have to be on duty 24/7 and also have to have callus on your fingertip ( the one you use to push the buttons with to change the price)Because it would hurt to much . ...I believe it , because you have to push the button continuously. Its like a carousel at the moment.

SusanliarnoldVIXIV:

Only kidding.But thanks for the information. I was wondering already what kind of excuse they would use this time about the rising gas prices.

Aditya:

A quick look at a few stories suggests that maintenance was planned for, and expected to be deeper than usual, but that accidents at key refineries has prevented inventories from rebuilding and helped push retail gasoline prices up.

Britestar:

Hello, Michael K. It's been 36 years since I first walked into an oil refinery. It's been over 50 years since I discovered you just can't believe everything you hear or read.

Jeweldane:

dunrunnin has it, grearing up for the peak driving season (that's demand) & shifting in all the special formulations thay are required to offer (that's dilution of supply). There have been no new refineries built since 1976 due to the draconian environmental rules so as demand has increased the existing refineries have enhanced produtivity & efficency to create the added supply. Just common sense dictates that when you run a production facility beyond capacity you will experience maintenance issues at some point in the cycle. the world petroleum industry would not exist if not for the American free enterprise system! people who stymie the petroleum industry whether through road blocks to exploration or overburdening the system with egregious taxation are enablers to the terroist, higher prices are what is allowing the islamofacist to practice their brand of hate & destruction.

Britestar:

Hello JIM. That's propaganda that you choose to believe. It so happens I often work in oil refineries. The decision to expand existing refineries instead of building new ones is a sound business decision. Many own enough land to put six more refineries besides it. They have to be supplied with crude and located logistically to sell their products. Remember how they said ethanol can't be put through pipeline. Can you show me a gasoline pipeline? They only exist to feed the barges and trucks that transport gasoline product, and are located inside the refineries. There is no chemical liquid or gas that hasn't been put through a pipeline, it's just a matter of public safety who owns the pipeline. Pipelines can even transport different products by separating the products with a device called a pig. It is a foamed rubber separator that squeals like a pig when it passes, and are also used to clean the pipeline. The simple point is that the environmental movement doesn't have the influence in the government that the dollars of the anti-environmentalist have. The oil industry is doing well with record profits and has the influence in our government to do even better. Take care.

Timkat2:

The 'News' doesn't report news to the people anymore. They seem to print stories meant to lead sheep to certain reactions, all geared against Bush these days.
Refineries have done yearly maintenance at this time forever. The stories should include the facts that no new refineries have been built in over 20years in this country and it's only a matter of time till the outdated ones we still have will not be near enough. And then it will be a bit late to start the 10 year process of building another.

SovieTAviator:

SUMMER GAS PRICES,TENSIONS IN THE MIDDLE EAST ,ROUTINE MAINTENANCE,ETC.,ETC., WE WILL NEVER LEARN.I RIDE MY BIKE.

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