Why do Oil Companies refuse to build more Refineries in America ?

Question

Every few months we have tragic fires, mechanical breakdowns, and other ridiculous reasons for shutting down one of our own few 30 year old refineries. With the enormous cost oil Crude Oil, and the need to refine it, why do such profitable Oil Companies refuse to invest money into their business. Business 101

Most individuals with any common sense can understand it is simple greed. If we had more refineries, we could manufacture more gas, the price would lower, and so would their profits.

Why do we all ignore the issue, stick our heads in the sand, and pay higher prices for everything now?

We have been fed the oil shortage story for years. Its a lie and we are sick of it. Simply put, we buy oil from Mideastern Countries, so that if they ever run low, we can use our own resources in Alaska, Canada, and the"protected"areas of the Gulf of Mexico.Then sell to back to them.

Why has fuel mileage per gallon stayed the same for over 30 years ?

Why do we meekly sit here and daily get screwed

Answer 1

The environmentalists will not let them.  We can not build refineries, we can not Drill ANWAR, we can not drillGulf of Mexico, we can not drill offshore........Thank the Democrat party and the Sierra Club for high gas prices...and now the Democrat party wants to raise prices again by adding taxes and removing tax breaks...All adding to the cost of producing petroleum products

Answer 2

Everyone likes to blame the environmentalists for everything.  

Oil companies are profit-driven businesses like all others.  They do not want to do anything that isn't in their best interest.  What kind of a business would invest millions of dollars in a project that is going to reduce their overall profit levels?  If cost > benefit, the project doesn't happen.  That is the way it is in any industry.  Why should the oil companies do that?

Answer 3

It's not the oil companies, it's the environmentalists that are the problem.

And anyway, it's hard enough to find people who wouldn't mind a new Wal-Mart nearby, it's even harder to find people who wouldn't mind a refinery.  That's the idea of NIMBY (Not In My Backyard).

Answer 4

It'sot the oil companies that refuse to buid the refineries. The same environmentalist wackos that will not allow us to drill in Alaska and are backed up by the idiots (Democrats) in Washington will not allow it. Most of our oil imports today come from Canada. Why won't Ted Kennedy allow a wind farm to be set up that would power 3/4 of Cape Cod ?

Answer 5

Refuse?  Are you out of your mind?  Oil companies gave up trying to get new refineries built because every location they choose offends someone.  They were forced to spend tens of millions of dollars fighting every environmental and local interest group, when that money could have gone into refinery development.

To your point about refusing to invest, you have no idea what you're saying.  The major oil companies this year alone have 80 BILLION dollars invested in capital improvements.  This is why Bush won't impose windfall profit taxes.  If you unduly tax the energy industry, you only stop long term investing, which is why nobody tried to build a refinery for 20 years, because there wasn't enough profit involved.  ROACE - Return On Average Capital Employed...  Business 102...

Check news reports.  One joint venture is in the process of expanding the Port Arthur, TX refinery to 600, 000 barrels per day capacity, making it the largest refinery in the world.  Exxon, BP, Total, Sun all have similar projects in the works.  It takes a little longer to get an expansion completed, but at least you've got the precedent of a refinery on site, so the NIMBY's and environmentalists can't gripe about that.  The problem is, it will take 7-8 years before the expansions are complete.

You're right, we're paying higher prices for EVERYTHING.  That's what happens when the dollar weakens on the global market.  It buys less and we pay more.  Commoditiy prices increase as investors seek a hedge against inflation.  Gold is near recent all time highs and climbing again today.  Thieves are cutting catalytic conveters out of cars and selling them for the platinum coating inside.  Economics 101...

Hehe, we import more oil from Canada (twice as much) than we do any other country.  Mexico and Saudi Arabia run a close 2 & 3.  You really don't have facts, do you?  We don't currently have an oil shortage, not sure where you came up with that, either.  Our current inventories are near all time highs, because, as you said, we're paying more for everything, and people are demanding less petroleum derived products.  We are approaching peak oil, the point at which we're consuming more oil than we're finding, but we're not there yet.  As for a shortage, no, no shortages.  There's 100 years of untapped oil sands, the oil shale in Colorado hasn't even begun to hit the market, Russian oil reserves are only just beginning to be determined.  Easy oil, where you stick a pipe in the ground and oil comes gushing out, that's being used up.  We will pay more as these alternative crude sources become more common, but we've got enough oil to last through our grandchildren's grandchildrens lifetimes.  That's 4 generations, in case you're having trouble with the 5th grade math...

Alaska - ever heard of the Alaskan pipeline?  It's not for spring water.  We're pulling every barrel we can out of the open fields.  The ANWR we're always hearing about has unproven reserves.  We've never determined if there's even oil in there, so don't be counting your eggs until they're in the basket.

Gulf of Mexico (GOM) - We're tapping new fields in the GOM as quickly as we can.  Rigs are exploring deeper waters than ever before in search of proven reserves.  Protected waters?  Well, folks in the tourism industry might be a little miffed if Florida's pristine beaches turned into essentially garage floors, covered in thick, greasy muck.  Competing interests have a way of working themselves out.  As we approach and eclipse the peak oil point, those closed fields will suddenly become more attractive.  Technologies will be developed to avoid releases or clean more efficiently and quickly, then pressure will ease and fields will open.

Why has the CAFE stayed the same for 30 years?  Because the government you're bitching about not opening new fields has also not pushed the auto makers to improve efficiency.  Can CAFE increase?  h**l yes, build smaller cars.  It's actually set to increase in the next few years and automakers are screaming like smashed cats, just like they did with the first CAFE standards.  Why?  Hmm, we're back to the less profit problem we discussed above.  Does a manufacturer want to build a vehicle they make a 2% margin on, or one where they make a 10% margin?  Those big trucks are cash cows for the Big Three.  They're already teetering on the edge of financial ruin, losing high profit lines will only hasten their demise.  But then our auto industry will collapse and what will that get us?  Hmmm, Sociology 101.

Then there's Joe Consumer.  He loves his pickup and his SUV.  His boat is 35 feet long and he needs a big vehicle to tow it to the lake every weekend.  So what if he blows 200 gallons of fuel every weekend?  This is America, damnit, and nobody's going to tell us how much we can waste.  But someone better stop those Chinese and Indians from wasting energy.  Ever think how they've viewed us for the last 50 years??  Political Science 101...

Let's go back to rationing gasoline like we did in the 70's.  Remember that?  We couldn't even visit my cousins and stay overnight, because of gas rationing.  We waited in line at stations for an hour or more to get the little gasoline they had.  There was double digit inflation and gasoline was relatively speaking, twice what it is today.

Grab your crying towel and hit the bench, rookie...