• Aug 28, 2008
A number of factors are conspiring to create a situation that recently would have been unthinkable: the United States as a supplier of gasoline to world markets. According to Booz & Company, those factors are the rise of biofuels in the West, the introduction of plug-in electric and other alternative fuel vehicles, and the growth of the really cheap car, like the Tata Nano.
The United States imports oil to feed its gasoline habit, but the U.S. has refining capacity that developing nations cannot match. The U.S. is also lowering its reliance on traditional gasoline due to the price, states' mandates on switching to biofuels, and the dawn of mass market alternative fuel vehicles. This adds up to the United States importing oil, and then selling it to nations like India and China to feed their larger appetites for gasoline.

In the middle of all of this are the refineries, who made predictions for today's business plans two decades ago. Sure, no one is crying for them -- they need extra pages to include the zeros on their profit statements -- but they have to start figuring out who's going to need which products and how they are going to deliver them. And, by refining company standards, they need to do it quickly, which is a method of operation they aren't well versed in.

[Source: Green Car Congress via Kicking Tires; Photo CC 2.0 - National Archives]


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  • 29 Comments
      • 6 Years Ago
      so what's stopping india and china from building their own refineries?
        • 6 Years Ago
        Nothing. They will build their own. This will never happen in the US.
        • 6 Years Ago
        Keep in mind two thing:

        First we have not only some strict environmental laws and regulations that nearly bar new refineries, but we also have litigious fans of the environment that would postpone new development for decades, if not forever.

        Also, all of those laws and regulations that we have pose no barrier to India or China, who have nearly zero environmental laws.

        New refineries won't be built domestically, especially if our appetite for oil declines.
        • 6 Years Ago
        nothing really, except that we have the capacity now and are probably ahead of them in terms of technology and other factors.
          • 6 Years Ago
          India already has some of the world's biggest refinaries and they building few more. They had given contract to haliburton to build it, but after hearing the cost decided to do it themselves.
      • 6 Years Ago
      We haven't built a refinery in more than 30 years due to governvironmental regulations, and most of them are running near max capacity due to the finite capacity of only those refineries. More regulations say that they have to custom blend gasolines for almost every state, and for various seasons, adding to costs and processing. Which US drivers have to pay for.

      Granted we don't have a giant shortage, but we don't exactly have a huge surplus of refined fuel, either, but now we all of the sudden have the available production capacity, and crude oil supply to export gasoline, likely without US government mandates on blending or alcohol content, to other countries? Why am I incredulous about this?

      And meanwhile, it still costs me more than 50$ to commute to work per week, in gasoline... Yeah, not feeling great about that. Light sweet crude is still over 100$ a barrel, and I still have to get to work every day, as do most other productive americans.

      "But no, no more refineries, not even on closed military bases... that would hurt the governvironment. Boo hooo..."

      Get the government off the backs of the american people before selling off our resources to other countries. When we have a surplus, and things are well in hand, then perhaps consider it, in the free market. Until then, I don't like this scenario.
        • 6 Years Ago
        "Why am I incredulous about this?"

        I don't know why you're incredulous but I can give you a reason why you shouldn't be. According to people that watch this sort of thing, US drivers will drive 125 Billion fewer miles over the next 12 months.

        http://tinyurl.com/63v2qa

        I know in June alone, drivers put on 10Billion fewer miles this year than last. So as you can see with less driving and higher efficiency cars, we don't really need more refineries, we just need to change wasteful lifestyles and maybe even inflating our tires properly will shave another billion gallons.

        The problem with energy in this country is not with supply, it is with consumption. I will say it over and over. Consumption is the problem. If you want to compare GDP per unit of oil consumption, the EU has something like $2600 in GDP per barrel per year. The US is at about $1500 in GDP per barrel per year. The UK is the best in the world in this respect with $3750 in GDP per barrel per year.

        We can do a lot better if we tried. If the Brits can do it so can we. We have more land, better geothermal, hydro, solar, and wind sources for power generation than Britain.
        • 6 Years Ago
        Graham: Quitting smoking cold turkey rarely works. What you seem to be suggesting is a sweeping change in not only industry habits (which would be slow to adopt by design, no matter what the change-especially one this massive) but also in the consumers' utilization of fuel by artificially creating a fuel shortage. This seems to make as much sense as cutting off my leg because of a broken toe.

        US automakers have been caught with their pants down in regards to product. They should not be spared of some ridicule for being an enabler to poor habits, however they have been making efforts to cope with the new upswing in interest in more fuel-efficient vehicles (This trend should be continued even if gas does become cheaper again lest they forget what is happening now).

        There is the new Volt, which will supposedly spawn other models from GM, Ford will start importing it's smaller euro models, and Chrysler...well, poor Chrysler is too busy fighting for survival after the skull-rape Daimler inflicted upon it without having to deal with restructuring it's entire product portfolio. Hell, even The Borg, er, Toyota is having it bad with the soggy US automotive market.

        While the Big Three struggle with these factors, as well as Union and pension woes, they will likely need time to develop and produce more efficient products.

        On the other end of the spectrum, with the housing market, food prices rising, fuel prices astronomical and stuck with their Dodge Durangos et-al, consumers will need time to prepare for and readjust to the new realities of more expensive fuel.

        In light of these facts, what should be done is this; surplus oil should be diverted to stave off the cost of fuel for a while, to give everybody time to cope with the changes. If we can build a US oil reserve, then we can pump some of it into our tanks for a while. This should be one of the reasons for a reserve (the other, of course for military and governmental needs-speaking of which, I think that the Chevrolet Volt should be the official staff car of government workers, including Dubya and successor. Show by example, and quit being a drain on resources yourselves). Use this new-found surplus we are shipping overseas to help keep the reserve.

        We already penalize companies that fail to comply with CAFE mandates, so give automakers that do comply with them incentives that they can use to help build these economobiles we all need right now. Use the money gained from non-complying makers. Ford will not want it's money going to GM or Chrysler because it didn't comply and they did, and vice versa-therefore, they'll keep each other in check.

        Reinforce the gas-guzzler tax, to encourage shopping for more economical choices and to help fund the reserve, as well as R&D for alternatively-powered engines. If soccer-mom must have her V8 suv over a more fuel-efficient minivan or midlife-crisis guy must pick a Chevrolet Camaro SS over a more efficient Cobalt SS (purely for personal reasons-remember, beauty hurts) they should be willing to pay for it, and give buyers of more thrifty cars and trucks incentives to do so.

        There is plenty of blame to go 'round, so it would seem to make sense for everybody to have to take action to fix the problem of expensive gas in correlation with poor natural energy usage habits. Instead of cutting off an appendage, let's try using a splint instead.
      • 6 Years Ago
      Desi Auto is right - India does have some of the world's largest refineries but the last one at Jamnagar that he talks about was built not by KBR-Halliburton but by Bechtel with Larsen and Toubro of India as the subcontractor. There are several earlier refineries at Chenna, Kochi, Dwarka etc that were built by the USA during the 1950s and 60s when India and the USA were close and before things became difficult during India's socialist years. There are more refineries planned by some large Indian groups and they should be built soon. Even Saudi Aramco sends crude to India for refining. The Indians don;t need any fuel refined elsewhere.

      As far as CHina is concerned, like Desi Auto, I have no idea.
      • 6 Years Ago
      we are already exporting a record amount of crude oil, at the same time that oil companies are trying to get more drilling here in the US...

      http://uk.reuters.com/article/oilRpt/idUKN0325640920080703
      • 6 Years Ago
      Gee, since the whole nation seems to have to go along with whatever super-green Cali mandates as far as emissions goes why do we not do away with the custom state blends, and all of us just use the California blend, thus doing away with a major cost factor.

      And yes, I am pissed that gas costs so much for us because of "excess demand" and "supply shortage" yet we now have the surplus to ship it around the world.

      G-dd-mm-t, f-ck the rest of the world until we fix our own country. I am tired of America trying to fix the world while screwing over it's own citizens. We hear about all the economic woes of all the other countries, but step over the homeless in our own. And seeing as we are doing the wonderful deed of restructuring Iraq when no one asked us to (Saddam is out of power, job done), why can we not get some reimbursement in the form of cheap Iraqi oil?

      "Buy a more fuel efficient vehicle", I'm told. Man, I wish I could but if I can barely afford to put gas in my $300 18 year old Jeep (the only vehicle I could afford at the time after the head gasket blew on my old car), how the hell am I supposed to afford a new car?
        • 6 Years Ago
        Explain
        • 6 Years Ago
        @David
        "G-dd-mm-t, f-ck the rest of the world until we fix our own country."

        Are you OK now after your little rant? Let me tell you something about mulitnational corporations. They don't give a sh!t about you and your citizenship. Exxon/Mobil may be a US company that is in name only. They are a global company and the buy and sell oil products on the world market. Same with Valero, Chevron, and the list goes on and on.

        Did you watch any of the 2008 Olympics? Did you notice how Coke and McDonalds and Visa (all of them American headquartered companies) weren't really rooting for the "home" team in their ads any more? I remember the 1980 Olympics when all those companies were falling over themselves to appear to be sponsoring the US National team. Why the big change you may ask? It is because they don't want to appear to be taking sides lest it make them appear to be playing favorites and piss off their other markets. (These would be the Chinese overlords other were mentioning in comments to this post). And that is what they are showing on ads IN THIS COUNTRY! Imagine what McDonald's and Coke ads looked like in China. Root, root, root for the home team I am sure.

        Anyway, don't expect any of these multi-national companies to "do the right thing" for the good ole' USA any time soon. As long as world demand for oil products (or any commodity for that matter) is high expect to pay through the nose for it, even if we produce a lot of of it right here in America.
        • 6 Years Ago
        Of course, a business is a business and out to make profit. Also, America is losing face with a lot of countries right now for the actions it's taken in defiance against what other nations have supported and/or suggestions and the support of America in ads could in some points of view be construed as support of our military actions as well.

        However, my "little rant", was in anger and disgust at the American Government and it's to lack of regard as to what it's citizens want. I believe the defining principle of said government used to be "By the people, for the people". Now it is "To the people, against the people". It's sad and I'm pissed. I uphold the principles that made our country great. Unfortunately, they no longer seem to apply. And if our country is acting against the needs, goals and desires of it's populace, then why should we feel compelled to condone it's actions.
      • 6 Years Ago
      I find it amazing that we're paying through the ass for gas because the excuse is the liberals won't let us build new refineries and yet somehow we now have excess capacity that we can ship gasoline around the world?!

      WTF?!

      Now be good little citizens and continue to take the sh#t being dished out by these politicians. You all suck.
        • 6 Years Ago
        "I find it amazing that we're paying through the ass for gas because the excuse is the liberals won't let us build new refineries and yet somehow we now have excess capacity that we can ship gasoline around the world?"

        I find it amazing that you think new refineries would solve the problem. Another way you can save money is by driving less.

        If environmental types had made it easier to build new refineries, where do you think the gas/diesel would have gone? Would it have made gas that much cheaper? Answer, no and no. The refiners would have just shipped it somewhere else. So you would have a refinery in your backyard, your gas wouldn't be any cheaper and on top of that all the extra gas would go into some French guy's Renault. Thank god for the "liberals" who wouldn't bend on this issue otherwise we'd have more refineries in heavily populated areas like in Richmond, CA.
        • 6 Years Ago
        "I find it amazing that we're paying through the ass for gas because the excuse is the liberals won't let us build new refineries and yet somehow we now have excess capacity that we can ship gasoline around the world?"

        I find it amazing that you think new refineries would solve the problem. Another way you can save money is by driving less.

        If environmental types had made it easier to build new refineries, where do you think the gas/diesel would have gone? Would it have made gas that much cheaper? Answer, no and no. The refiners would have just shipped it somewhere else. So you would have a refinery in your backyard, your gas wouldn't be any cheaper and on top of that all the extra gas would go into some French guy's Renault. Thank god for the "liberals" who wouldn't bend on this issue otherwise we'd have more refineries in heavily populated areas like in Richmond, CA.
      • 6 Years Ago
      All of our roads will be paved! yes
      • 6 Years Ago
      Sounds good -- import a raw material (crude oil), add value to it and export the finished product (gasoline). Works for me.
      • 6 Years Ago
      This is just one:
      http://en.wikipedia.org/wiki/Jamnagar_Refinery

      Check the whole list.
      • 6 Years Ago
      Yeah? No. If you guys haven't noticed we will soon have Gustav churning away and gathering strength in the Gulf of Mexico. All the models have this sucker hitting around Houston and/or NOLA. If he becomes a Cat 4 or 5 and wipes out the refineries in the area... then we can look forward to $7-8 gas in a few weeks.
      • 6 Years Ago
      By the time this even becomes an issue worth debating, our Chinese overlords will tell us what to do with our supplies.

      Kidding (I hope)
        • 6 Years Ago
        Economically, China may come close to us eventually. We do have a very mature economy, and when China gets near our level their economic growth will begin to slow to a crawl.

        However, militarily, China will probably never reach the capability of the US. Unless we completely relinquish our nuclear arsenal AND disband our ultra-massive Navy (so massive it is absolutely uncontested by any nation, or even groups of nations) then China will still remain second fiddle.

        This is all beside the point. In reality, we shouldn't be competing with China at all. People here constantly talk about how the Europeans view us, and how we need to be more politically congruent with them. In my opinion, Europe is old news. We need to be primarily associating with China and India. Let the EU rot.
        • 6 Years Ago
        @Travis
        "I for one would like to welcome our Chinese overlords..."

        You just need to learn Chinese so that our Chinese overlords will be able to understand your groveling. :-)
        • 6 Years Ago
        I for one would like to welcome our Chinese overlords...
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