🚀 go-pugleaf

Logan Shaw <lshaw-usenet@austin.rr.com> wrote
> timeOday wrote

>> Like I said, most of it is already imported, why not refine it BEFORE 
>> importing?   It's no more bulky as gasoline than crude.  By importing just a 
>> few percent as finished product, we'd easily put slack into our own refining 
>> capability.

> This looks like a really good article on the subject:
 > 
http://www.washingtonpost.com/wp-dyn/content/discussion/2005/09/06/DI2005090600718.html

Nope, its just the usual journalistic silly
stuff that gets the basics wrong.

> That article makes several good points about the current situation.

No it doesnt.

> It says:

> The problem with the recent gas price spike is not with crude
> supply, but refining capacity. The Bush administration tried
> to help relieve that bottleneck by waiving environmental rules
> that prevent import of certain types of refined gasoline, which
> is helping quite a bit.

> So, apparently one of the reasons we don't import refined oil is that there 
> are environmental issues with doing that.

Wrong.

> I don't know what they are specifically, but I do remember an announcement 
> that Bush was temporaril waiving restrictions on foreign imports of refined 
> oil.  So, part of the reason we don't import more refined oil may be that 
> there are regulatory difficulties with doing so.

Correct.

> And here's a second reason why offshore refineries aren't being built:

That is just plain wrong, they are being built.

> San Jose, CA: Since American oil companies appear to be unwilling to build 
> additional refineries into the US, why don't other companies build additional 
> refineries in foreign countries,

They do.

> and import refined producs into this country?

That regulatory problem above.

> Is it more difficult to import gasoline and heating oil than regular crude?

Nope.

> Steven Pearlstein: I've been asking the same question myself,
> and getting not very good answers from the
> Obviously, transportation costs are higher when you import.

Mindless stuff. Its actually cheaper
to transport the final product, stupid.

> But you might well save on production costs if you did it in
> Aruba. So I don't know why investment in offshore refineries
> that are designed and built to produce gas for the American
> market haven't been a good alternative. Again, my suspicion
> is that they don't want to invest in too much capacity.

You're wrong.

> I would add two things to that.  The first is that he may have a point about 
> transportation costs.

Nope.

> Elsewhere, he makes the point that oil is a commodity, and we buy crude oil 
> from a wide variety of places.

Just as true of gasoline.

> The oil has to travel from wherever the supply is to wherever the demand is.

Just as true of gasoline.

> If we have refining capacity near the demand (you'll note that both New 
> Orleans and Houston are ports and are geographically pretty central within the 
> US), then you can be pretty sure the oil only has to make ONE trip.

That is just plain wrong.

> But if you move the refining capacity elsewhere, then it might be near the 
> supply, but that depends on where the supply is (and again, it is a commodity 
> market), so it might not be near the supply.

> You could create a situation where the refining capacity is at a third 
> location that isn't on the way between the supply and the demand,

It would be stupid to build a refinery there, stupid.

> so you would increase transportation costs.

Wrong again. The cost of sea transport isnt dependant
on the shortest distance the commodity is moved over.

> Either that, or you *only* buy crude oil from locations that can refine it as 
> well as producing it, which means crude oil is no longer a commodity and you 
> pay higher prices for it.

Gets sillier by the minute. The gasoline becomes the commodity.

> The second thing I have to add is that, most likely, as a practical
> matter, no new investment will occur, whether offshore or onshore,
> until the existing refineries are not only inadequate to meet demand

Have fun explaining the extensive investment
in new refining capacity offshore.

> but have been inadequate for a long time and expected to be for a longer time. 
> Nobody wants to make an investment in a facility that will pay off in the long 
> term but will only be in demand for a year or less.

No reason to believe that demand will spike.

> Only sustained shortages will cause new investment in refineries.

Wrong again. The other obvious reason to do it is to get
lower cost of operation with modern new refinerys which
can make a profit at a lower price of gasoline than the
dinosaur operations that havent been upgraded or whose
operations are crippled by stupid environmental restrictions etc.

> And, in a sense, refineries are managed like airplane rides:

Nope, nothing like.

> it's a very expensive resource, so they run as close to capacity as possible.

Its MUCH more complicated than that.

> On an airplane, they overbook on the theory that some passengers will not 
> show, because it's very important to them not to leave a seat empty if they 
> can avoid it.
> It's the same thing with refinery capacity.

Nope, nothing like.

> When it's so expensive to build, they have no motivation to have reserve 
> capacity just to be prepared for stuff like hurricanes.

Nothing like airplane seats where you do indeed see lots
of excess capacity because travel movements do in fact
vary quite dramatically with the time of the year etc.

> I thought this article made one other good point that was really good:

Nope.

> I think we should be careful of saying the oil companies
> took advantage of the situation, although they will enjoy
> a windfall profit for a while. Look, in any market, when
> supply is interrupted and demand exceeds supply, the price rises. And the 
> effect of the higher price is to ration the scarce commodity to those who need 
> it most, while depressing demand -- both of which are a good thing, under the 
> circumstances.

In fact there isnt that much effect on demand at all.

> If oil companies were to keep prices artificially low, out of some sense of 
> obligation, all that would happen is that gas stations would run out sooner, 
> with other bad consequences.

Wrong when there isnt much effect on demand.

> The right policy response to this isn't to limit prices -- it is to consider 
> some form of windfall profits tax.

No thanks.

> But you really wouldn't want to get into that unless these exhorbitant prices 
> persist for a long time.

Have fun defining what are exhorbitant prices.

> Those kind of taxes are notoriously tricky to devise and administer.

Completely impossible, actually.

> Since changing prices are the natural way of regulating things in a situation 
> where the relationship between supply and demand is changing,

They arent in the real world with gasoline in north america.

> I don't think we should try to prevent the prices from changing.

Yep, that never works.

> Price is our society's way of assigning value to things, and if something 
> important is suddenly scarce, it *is* more valuable as a result of being 
> scarce.  But a tax on the record profits wouldn't necessarily be such a bad 
> thing.

Corse it would, its completely unworkable and the voters would
never buy it anyway. The price goes thru the roof and the govt
increases the taxes on it ?  Alice in Wonderland stuff.

> I'm sure we could find a use for the money,

Yeah, to pay the pensions of the politicians
given the bums rush at the ballot box.

> and it wouldn't cause shortages like a price cap would.  Heck, you could even 
> use the money to give everyone a tax refund -- as long as it wasn't geared 
> towards how much gas you use, it still wouldn't screw up the way prices help 
> keep supply and demand balanced.

Completely off with the fairys...