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Oil blaming ethanol for refinerys closing

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http://www.texasinsider.org/?p=61798&cpage=1#comment-67293

 

Thanks to federal government mandates, oil refiners are losing millions of dollars every quarter. As a result, two refineries in the Philadelphia area have already been shut down, and a third is scheduled to close this August. Thousands of jobs have been lost, and if all three facilities go offline, the East Coast will have lost 50 percent of its refining capacity.

How is this possible?

 

First, forget everything you’ve ever heard about oil being a perfectly fungible commodity where prices are set globally. That may have been true five years ago, but in 2010, the price for West Texas Intermediate (WTI) oil began falling as major oil fields in Canada and North Dakota came online. Meanwhile, the Arab Spring has kept the price of Brent crude oil high. It is now common for the price of a barrel of WTI to be $20 cheaper than a barrel of Brent.

 

Again, if oil was truly fungible, this would not hurt East Coast refineries any more or less than refineries in Texas. But not all oil is created equal. The WTI oil from Canada and North Dakota is harder to refine than the Brent crude oil that Philadelphia refineries had been getting off boats from West Africa and the North Sea.

 

It would have cost each East Coast refinery hundreds of millions of dollars to upgrade their facilities. And it might have been a good business decision to bite the bullet and do it, but for government ethanol mandates — specifically, the 2007 Energy Independence and Security Act, which requires that every gallon of gas must contain 10 percent ethanol by 2022 (it was 2 percent in 2005). Ethanol mandates require refineries to sell their finished gasoline to blending terminals that then combine it with ethanol brought from the Midwest by train (ethanol cannot be transported by pipeline). The blending terminals then distribute the finished product to gas stations.

 

Every gallon of government-mandated ethanol cuts demand for refined gasoline by one gallon. Less demand for refined oil means lower prices for refiners, and lower prices mean more East Coast refiners go out of business.

 

And don’t get excited about those “lower prices,” either, because you don’t share any of the savings at the pump. Measured by its per-gallon energy content, the ethanol mixed with your gas costs more than the gas itself. Ethanol helps you fill your tank for less, but it costs you more because it makes you fill your tank more often.

 

Thomas O’Malley, chairman of PBF Energy, recently testified to Congress, “If the fuel substitutions from 2012 to 2022 … are maintained, we will lose over that time period an additional 10 percent minimum of U.S. capacity. … If bio/renewable fuels manufacturers can produce on a superior economic basis to hydrocarbon fuels, they should do so and take market share the old fashioned way — better quality and better price without government mandates or subsidies.”

 

http://www.texasinsider.org/?p=61798&cpage=1#comment-67293

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So what is it? In one sentence they say ethanol cuts demand for gasoline and in another they say you burn more fuel meaning more gasoline is needed. Makes no sense.

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One gallon of Ethanol reduces demand by one gallon of Gasoline? How does that work if Ethanol has less energy content? Simply because they have the same volume maybe?

 

Not to mention there are studies on how much of a savings Ethanol has on Gasoline prices. Not all of it is the effect of the lower price per gallon but also the reduced demand from having a competing product.

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They have to come up with something else to keep people negative on ethanol. This is it. Costing jobs and refineries closing, so gas will cost more because of government mandates and EPA regulations.

 

Typical oil propaganda.

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blaming ethanol for refinery closing... sort of like saying "fewer drunk drivers on the road is causing layoffs for emergency rooms, ambulences, auto body shops and morturaries..." 

 

the gassers are getting desperate.

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"Every gallon of government-mandated ethanol cuts demand for refined gasoline by one gallon."

 

"Ethanol helps you fill your tank for less, but it costs you more because it makes you fill your tank more often."

 

You can't have it both ways.  These statements are contradictory; one of them is a lie.  Therefore, the rest of the article is written by liars.

 

We have a term for that.  It's called doublethink.  Definition:  The power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them....To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just as long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies - all this is indispensably necessary. Even in using the word doublethink it is necessary to exercise doublethink. For by using the word one admits that one is tampering with reality; by a fresh act of doublethink one erases this knowledge; and so on indefinitely, with the lie always one leap ahead of the truth.

 

To me, it seems as though oil needs an excuse for their deliberate price gouging.

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the real story should be "oil industry idles major oil refinery to help drive up the price of gas due the the resulting shortfall of fuel.  To covery their tracks they pull out the standard story that ethanol is to blame.  The ignorant masses as usual fall for the misinformation campaign hook, line and sinker!"

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To me, the essence of the article is captured in the last sentence or two. 

 

He has challenged the biofuels industry to take marketshare the old fashioned way.

 

  We should oblige him.

 

Job losses in petro-refineries can be job gains in MSW-to-ethanol plants, or  ethanol vehicle conversion/test operations.  Hi-tech employment is needed in either field.

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  Not hard to believe an industry ( corn ethanol)  can be deeply entrenched as to not

 

see other opportunities... in just 6-7 years.  This is the LAND of opportunity.

 

  A well-monied individual -or two-  might be welcomed in our corner, right about now...

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