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IronLionZion

(45,261 posts)
Tue Jun 21, 2022, 09:16 AM Jun 2022

Oil refineries are making a windfall. Why do they keep closing?

https://www.washingtonpost.com/business/2022/06/20/refineries-profit-gas-prices/

Companies see only headaches on the horizon for refineries, undercutting the White House push to boost production



PHILADELPHIA — As the energy crunch drives record profits at American oil refineries, the owners of what had been the largest such facility in the Northeast have no regrets about tearing the place down.

Hilco Redevelopment Partners has been hauling out 950 miles of pipe from the former Philadelphia Energy Solutions refinery, abandoning the property’s 150-year history of processing crude oil into fuel in this city. The firm is spending hundreds of millions of dollars to convert the 1,300-acre site along the Schuylkill River into a green, high-tech campus for e-commerce and life sciences companies.

“I don’t even know how to operate a refinery,” said Roberto Perez, chief executive of Hilco, which bought the property in a bankruptcy auction in 2020, a year after a massive explosion at the refinery rattled the city. “It’s not what we do.”

Oil refineries across the country are being retired and converted to other uses as owners balk at making costly upgrades and America’s pivot away from fossil fuels leaves their future uncertain. The downsizing comes despite painfully high gasoline prices and as demand globally ramps up amid sanctions on gasoline and diesel produced in Russia, the third-biggest petroleum refiner in the world, behind the United States and China.

Five refineries have shut down in the United States in just the past two years, reducing the nation’s refining capacity by about 5 percent and eliminating more than 1 million barrels of fuel per day from the market, leaving the remaining facilities straining to meet demand. Yet even at this lucrative moment for what’s left of the refining industry, a White House desperate to bring down gas prices is having little success persuading owners to expand operations, and more closures are imminent.


So maybe drilling isn't the problem. GOP keeps saying Biden won't let them drill.
28 replies = new reply since forum marked as read
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Oil refineries are making a windfall. Why do they keep closing? (Original Post) IronLionZion Jun 2022 OP
If they're making money hand-over-fist EYESORE 9001 Jun 2022 #1
Here is a suggestion I sent to Biden folks. Samrob Jun 2022 #25
I guess we need them, but oil refineries are filthy nobody wants to live near them Walleye Jun 2022 #2
They absolutely see no future, so no point investing IronLionZion Jun 2022 #3
What pisses me off is, we've known this for a long time. Walleye Jun 2022 #5
Ford's only car now is the Mustang IronLionZion Jun 2022 #7
Starting to see a lot of big a$$ trucks for sale by owner here in TX JCMach1 Jun 2022 #11
Good. My 2012 Hyundai accent just turned 50,000 miles. Walleye Jun 2022 #12
My 2010 Mazda 3 is now 105,000 miles and still going strong IronLionZion Jun 2022 #14
That is my car, too!! zeusdogmom Jun 2022 #15
I love the reliability. I've never had any problem in 12 years IronLionZion Jun 2022 #17
It is a fun car to drive (zoom zoom 😄) zeusdogmom Jun 2022 #26
Mine is stick shift too. Everything manual, roll up the windows with muscle.even has no radio Walleye Jun 2022 #18
I wanted a Mustang most of my adult life zeusdogmom Jun 2022 #27
2011 Chevy Volt... Last filled with gas in October JCMach1 Jun 2022 #20
👍 Walleye Jun 2022 #22
The Volt is a hell of a car Miguelito Loveless Jun 2022 #24
Urban Sprawl has done in a lot of them Captain Zero Jun 2022 #4
Way back in the day they needed workers to be able to commute to them IronLionZion Jun 2022 #6
Because oil companies are rigging the supply? Initech Jun 2022 #8
Profit over people IronLionZion Jun 2022 #9
Corporations always value profits over people. That's why we have government Walleye Jun 2022 #13
Drilling was never the problem. Domestic oil companies have always had the ability In It to Win It Jun 2022 #10
Like Writing A 30-yr Mortgage To A 75-Year Old Person modrepub Jun 2022 #16
This has been going on for a couple of decades or more Strelnikov_ Jun 2022 #19
Piss poor management! Emile Jun 2022 #21
Where's The Shortfall Of Supply? ProfessorGAC Jun 2022 #23
To get rid of their highly paid labor EmeraldCoaster Jun 2022 #28

EYESORE 9001

(25,812 posts)
1. If they're making money hand-over-fist
Tue Jun 21, 2022, 09:26 AM
Jun 2022

why not reduce capacity and drive the price higher? Refineries are expensive and risk-prone. They want profit without effort. Fuckers.

Samrob

(4,298 posts)
25. Here is a suggestion I sent to Biden folks.
Tue Jun 21, 2022, 12:14 PM
Jun 2022

A better idea, to me, would be to impose a windfall profits tax on excess profits since the month before Putin invaded Ukraine. I say a month before because I believe the oil companies and others had a heads up on what Putin was doing. The windfall tax would remain in affect until oil producers were back up to pre-COVID production.

I know the oil companies are using the excuse that they lost money during the pandemic but their loss was mostly from more record profits. They never encountered a REAL loss like almost every other business. They were at record profits before, during and now after the pandemic.

Don't bail them out by robbing Federal coffers just so they can keep their obscene profit margins.

Walleye

(30,723 posts)
2. I guess we need them, but oil refineries are filthy nobody wants to live near them
Tue Jun 21, 2022, 09:26 AM
Jun 2022

Having covered a few stories at Delaware City for the paper, explosions, fires, illegal burning of flares, air pollution. And they are ugly. If we can transition out of oil refineries it’s a good thing. I think the oil companies know this that’s why they’re not investing more. We need to get busy on other forms of energy. We should have decades ago

IronLionZion

(45,261 posts)
3. They absolutely see no future, so no point investing
Tue Jun 21, 2022, 09:29 AM
Jun 2022

They are costly to run, there's a labor shortage. it's dirty business.

Walleye

(30,723 posts)
5. What pisses me off is, we've known this for a long time.
Tue Jun 21, 2022, 09:32 AM
Jun 2022

But Americans in their arrogance just went on manufacturing and buying these huge gas guzzlers

IronLionZion

(45,261 posts)
7. Ford's only car now is the Mustang
Tue Jun 21, 2022, 09:37 AM
Jun 2022

American car companies have gone all in on SUVs, although some are hybrids or electric these days

Walleye

(30,723 posts)
12. Good. My 2012 Hyundai accent just turned 50,000 miles.
Tue Jun 21, 2022, 09:59 AM
Jun 2022

I haven’t kept track lately but when it was new I got 40 miles per gallon. It was built according to the CAFE standards, Before the Republicans tried to fuck that up

IronLionZion

(45,261 posts)
14. My 2010 Mazda 3 is now 105,000 miles and still going strong
Tue Jun 21, 2022, 10:13 AM
Jun 2022

it's a stick shift. Those last a long time and are harder to find these days.

zeusdogmom

(978 posts)
15. That is my car, too!!
Tue Jun 21, 2022, 10:19 AM
Jun 2022

Only I have 123,000 miles on it - a few road trips to visit kids. Great mileage on road trips. Wish in town was as good.

Love my little stick shift Mazda. Not looking to replace it anytime soon.

IronLionZion

(45,261 posts)
17. I love the reliability. I've never had any problem in 12 years
Tue Jun 21, 2022, 10:36 AM
Jun 2022

It's fun to drive and comfy, easy to park, holds enough luggage for me.

And a dog mom who can drive stick. swoon

zeusdogmom

(978 posts)
26. It is a fun car to drive (zoom zoom 😄)
Tue Jun 21, 2022, 12:36 PM
Jun 2022

For me it is the perfect car. I can drive for 10 hours in it and not feel stiff and sore despite being a bit on the older side of life. Zeus Dog fits in the back seat - takes up all of the space but he doesn't have to share it with anyone so it’s OK.

Sometimes the trunk and other available space is a bit cramped - 20 bags of mulch is the absolute limit but I can live with that.

I agree with the reliability. Nary a problem. I do need new breaks sometime in the next 5000 miles or so. The paint job has held up, too so the car doesn’t look old. Just kind of small tucked in between all of the much larger vehicles in a parking lot.


FWIW - my kids (both girls) learned to drive with a stick shift in a cranky tank of an old Volvo no less. Truly a dying skill.

Walleye

(30,723 posts)
18. Mine is stick shift too. Everything manual, roll up the windows with muscle.even has no radio
Tue Jun 21, 2022, 10:39 AM
Jun 2022

I love that six-speed stick shift. I think about when I was in high school and the Mustangs first came out. I would’ve loved a car like this back then

zeusdogmom

(978 posts)
27. I wanted a Mustang most of my adult life
Tue Jun 21, 2022, 12:50 PM
Jun 2022

Almost bought one about 15 years ago - good thing I slept on that decision. Just not a practical car for me. But still one of the most iconic car around.

My car is mostly manual, too. The most basic model available at the time I bought it. Windows are automatic but every door has to be locked or unlocked individually. Radio and CD player (upgrade from the cassette tape player in my previous car 😄

I have driven several rental cars with a lot of bells and whistles - they are nice cars, but it always feels so good to get back to my basic Mazda.

Miguelito Loveless

(4,438 posts)
24. The Volt is a hell of a car
Tue Jun 21, 2022, 12:11 PM
Jun 2022

Between it and a Nissan Leaf we cut our fuel usage from just under 800 gallons a year to less than 35.

Captain Zero

(6,714 posts)
4. Urban Sprawl has done in a lot of them
Tue Jun 21, 2022, 09:32 AM
Jun 2022

Once homes are near a refinery complaints come rolling in, even though the refinery was built far out of the city on a railroad line long ago. I've known of a couple that closed down due to that. Just my observation. Not sure what the action should be.

IronLionZion

(45,261 posts)
6. Way back in the day they needed workers to be able to commute to them
Tue Jun 21, 2022, 09:35 AM
Jun 2022

but now cities have transformed quite a bit.

Walleye

(30,723 posts)
13. Corporations always value profits over people. That's why we have government
Tue Jun 21, 2022, 10:02 AM
Jun 2022

Blaming politicians really works for these companies. And the rubes go for it.Corporations don’t have a heart or a conscience, they have a bottom line, we need to accept that and deal with it. Oh and no corporations are not people. Chrissakes

In It to Win It

(8,143 posts)
10. Drilling was never the problem. Domestic oil companies have always had the ability
Tue Jun 21, 2022, 09:48 AM
Jun 2022

to invest in more drilling if they wanted to. Nothing stopped them. Biden’s policy decisions only affected non leased and non permitted federal land. Companies were free to expand exploration on private and state land.

Refineries closed around the world. I remember reading about it while the world was still in lockdown. I remember reading refineries across Europe were closing. Additionally, I had contacts that were looking to build new refineries in the Middle East and in Europe last year and this year. Even given the lost global refining capacity, the banks I talked to were not interesting in financing oil refineries. Banks across Europe, the Middle East and Asia didn’t (and still don’t) want to jump into oil refineries anymore.

modrepub

(3,469 posts)
16. Like Writing A 30-yr Mortgage To A 75-Year Old Person
Tue Jun 21, 2022, 10:33 AM
Jun 2022

Would you expect a bank to grant a 30-year $500k mortgage to a retired senior citizen?!? Same concept, the ICE is going to be phased out in the next couple of decades (or less, no one really knows) replaced by electric vehicles for many folks. There's even a branch of folks who think personal car ownership will be phased out in the next decade. Replaced by self driving, vehicles that will be called on demand from third party companies. Think of all the money people could save on auto insurance and car storage if you can just hit an app and a vehicle shows up to take you wherever you want to go then viola it's gone after you use it.

We're in a major transition as far as how we drive is concerned. Some economists have likened it to Shumpeter's long wave theory, which predicts major shifts in economies due to technical changes (like the advent of computers negating the need for lots of data clerks to track business transactions).

Unfortunately, these types of changes (ICE to electric) are going to cause major economic reshuffling and most likely a lot of pain for folks entrenched in the old way of doing things. I think that's part of what your seeing in today's high gas/diesel prices.

Strelnikov_

(7,772 posts)
19. This has been going on for a couple of decades or more
Tue Jun 21, 2022, 10:41 AM
Jun 2022

Back in the 2000's the country had about 80 to 85% refinery utilization.

No profit in excess capacity, so new refineries were not built, some closed, and upgrades to ever larger refineries to take advantage of the economies of scale.

When Ike came within 30 miles of wiping out 15% or so of the nations refining capacity in 2008, we could have survived, between high prices and excess capacity.

Today, with no reserve capacity, and the mega-refineries all concentrated along the gulf, there will be shortages and have to be rationing in the event of what many of us have been worried about for years.

The Supply = Demand equilibrium will be broken, effectively.

ProfessorGAC

(64,425 posts)
23. Where's The Shortfall Of Supply?
Tue Jun 21, 2022, 11:56 AM
Jun 2022

It's well established that the supply/demand relationship to price is broken right now.
There are no shortages, because the most recent refineries and retrofit catalysis systems far more efficient.
So, the problem with price isn't because of the shutdown of antiquated operating systems.
For the hundredth time, if we keep blaming the refiners for price hikes they don't control, we'll never figure out what's really gone wrong.

EmeraldCoaster

(131 posts)
28. To get rid of their highly paid labor
Tue Jun 21, 2022, 01:00 PM
Jun 2022

They close then, they sell for profit to their competitor, then employee's get rehired by the new company with no bennies less pay etc... Over and over and over. It's a grift .

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