Home › Forums › Coking › News: DCU, Upgrader › 1.Coker (registered users only) › Update Hyperion SDakota Grassroot Coking Refinery still block Sierra Club gang › RE: Update Hyperion SDakota Grassroot Coking Refinery still block Sierra Club gang
Here is good offline question – that helps show why closing US refineries has domino effect & its not about just gas prices from imports.
Q: Charlie – I get the impression that the Sierra Club and their henchman would love to
shutter all US refining capability. All our coastal facilities could turn
into massive receiving terminals and tankage for distribution.
I’m the type of guy who owns two cars just so I have a spare and could
still function if one were to break down. I am strongly against our nation
being subservient to foreign powers, but for a second lets assume these
powers stay at piece and are willing to supply us with uninterrupted
refined petroleum products.
Logistically, is there anything fundamentally stopping this from working
(continue to pretend there are no Ahmadinejads or Chavezs)? We’d pay more
for transportation. The price to refine would be cheaper due to newer and
more efficient facilities. Also, these foreign locations would not be
subject to the beyond stringent water/air emission standards facing the domestic producers.
Thanks – I will have do “Cliff Notes” version of answer for you on US plants becoming just “terminals”.
First look at Europe & rest world gasoline/diesel prices – its 2X US at $6-8/gal …. thats where you go to
once we become dependent consumer. Second – its not just transportation & logistics cost that take the hit
on removing US refineries & rely on imports.
Your states who use asphalt more than cement patch and repair roads cost go from $250-400/t to above +$600/t that
becomes more expensive than cement but has be replaced every year. We have roads & bridges that are currently unsafe
because our bankrupt governemnt cant pay replace them. When asphalt prices spiked (due high sour crude/low asphalt prod/high demand) many local, state & fed programs had chose which road repairs to cut because budgets were fixed.
Then you move to agriculture that depends on cheap farm diesel/propane/fertilizer- of few remaining Farmer Coop fertilizer plants that run on petcoke & hence were not bankrupt by Nat Gas @ $6-10/MMBTU are helping to keep fertilizer below $300/t – which we now import, prior 2004 we were exporter Fertilizer that sold it $100/t.
Also due fertilizer & diesel cost …. forget Ethanol production or triple subsidy.
The FCC decant/slurry oil that goes into Carbon Black for tires/rubber production or your printer/xerox copy machine for toner – you now have import EU or elsewhere at more $1/lb…..
You dont just import products and keep any US business above water -more half US cost increase in most products are result of stupid and unnecessary legislation for emissions which have shutdown half US Refineries that were better emitters that current China new Grassroots plants.
Also – the only reason that we are still at only $3/gal on fuel is that we just shut down half of older less complex refineries and ramped up larger more complex ones so that we only loss ~13% total capacity. BUT rub is that that spare capaicty is what let us meet summer gas and winter diesel demand that is ~60% demand during 4 month periods and so
we had start importing 20% peak demands from foreigners – otherwise we would be at $7+/gal…. We see all ppt that tout US efficiency & production levels at same as they were with 2X the number refineries but ……. utilization has be at 93%+ capacity instead past 87% and all the charts are on annual basis not peak peak comparison.
Even if we only focus on fuel cost element – just think how many products have between 20-30% final cost tied up in multi-mode transportation cost get from producer to end consumer. Petcoke iand coal are far worse due low value – its somewhere in 60% range although most show only 30-40% its just the ship to ship moves & dont count rail/truk/barge move plant to port supply side nor port to consumer on delivery side – not document/demurage/loss cost averages…..,
KISS approach for complex mechanism like manufacturing usually mean media economic evaluator doesnt understand the market or connected economics.