Is Biden Right About Oil Companies?

[Rajoo]

Originally Posted by whell

We need to increase both refining capacity and supply, and we keep shooting ourselves in the foot, seemingly able to do neither very well.

Who is the we? Aren't they private companies, the epitome of Republican capitalism?

Its already clear that oil producing countries have no desire to increase supply. The US alone cannot do it since we are faced with future decrease in consumption of oil for both power generation and ICE powered vehicles. Most of the new power generation is solar and the car manufacturers are quickly migrating to EV technology. One of the iconic muscle cars built in the US since the 60's, The Dodge Charger is going EV next year, Mustang is already Mach-E with Camaro soon to follow. I am betting that within the next decade, most local delivery trucks, buses and vans (if not the semis) will be electric. So demand for oil is going to plummet.

So where is the increase in demand? Without that, supply cannot increase.

PS: Last I read, our refineries are still operating below capacity.

[whell]

Originally Posted by Rajoo

Who is the we? Aren't they private companies, the epitome of Republican capitalism?

You really aren't that naive, are you?

Here's a bit of info for you: https://www.eia.gov/tools/faqs/faq.php?id=29&t=6

As of January 1, 2022, there were 130 operable petroleum refineries in the United States.

The newest refinery in the United States is the Texas International Terminals 45,000 b/cd refinery in Channelview, Texas, which was operable on January 1, 2022, but actually started operating in February, 2022.

However, the newest refinery with significant downstream unit capacity is Marathon's facility in Garyville, Louisiana. That facility came online in 1977 with an initial atmospheric distillation unit capacity of 200,000 b/cd, and as of January 1, 2022, it had a capacity of 585,000 b/cd.

Capitalism isn't "Republican". It is the most efficient method for converting capital, however. Since most energy producers are public companies, they also have shareholders to answer to.

I've written about this before, so I'll point you to this article:

Chevron CEO Mike Wirth does not expect another oil refinery to be built in the United States ever again, due to federal government policies. The last significant refinery built in the United States was in 1976. (A small refinery came online in 2020 in North Dakota). Over the last two years, due to reduced demand from the pandemic and Presidnt Biden’s stated policy to reduce the demand for petroleum products, U.S. refineries have been shut down or repurposed to become biofuel refineries. In a business where investments have a payout period of a decade or more, it is unlikely for investment to be spent on policies where the demand is to be reduced. Wirth stated rhetorically, “How do you go to your board, how do you go to your shareholders and say ‘we’re going to spend billions of dollars on new capacity in a market that is, you know, the policy is taking you in the other direction.”

That's the crux of it. You're not going to get additional domestic refining capacity unless a lot of things change. Those things include letting the market decide when to move away from petroleum and toward alternative fuels, making environmental regulations more realistic for the refining industry, and public policy that encourages energy sources from ALL alternatives rather than singling out and making the production of oil and petroleum products more challenging, while subsidizing other energy sources.