the numbers are not made up. they are reported every wed at 10:30am. Last week capacity was at 81% this week at 85%. This during the time of year refiners are ramping up production for the summer driving season and during record high gas prices. they are not doing it this year because the “crack spread” is not there. I.e they make no money or very little money on gasoline when oil is shooting upward. gasoline margins come in when oil price is stable or downward sloping. it is not in their interest to supply more gasoline then is needed. Add into the mix that gasoline demand is slowing because of the economy and refiners are producig less gasoline because that is economics. It is not a conspiracy theory. It is economics. refiners shares are close to 52 week lows because they can’t make money on gasoline. what better time to plan “repair” work then when it benefits your company to decrease the supply of your product. If you think the refiners and the consumer have the same objectives you are mistaken. Of course the refiners what to ensure needed supply to the country. But they do not want to ensure plentiful supply during a time of declining margins, lower demand, and rising costs. Any CEO that did that would be fired.

explain again why the refiners are producing at 80% of present capacity when gasoline is at all time highs?

unseen on April 24, 2008 at 5:21 PM

Your premise is flat-out WRONG!! The only way you can get a number like “80% capacity” is if you count all of the refinery capacity which is out of service for planned and unplanned maintenance. Any US refinery which ran as little as 80% when the equipment was working would have its management forcibly removed and replaced by the corporate owners and/or the stockholders within a single quarter.

Refinery parts wear out…sometimes taking out other large pieces of the plant. The government demands way too many different refined products seasonally: each of which requires a shutdown, purge, and restart (planned maintenance) …thus reducing overall refining capacity.

But nobody makes money by deliberately idling a refinery: that is just wacky left-wing conspiracy lunacy!!

Grab a copy of the annual report of Valero or any one of the other major refiners off the web to see how badly they want every facility utilized to its maximum, what extreme measures they put in place to assure a continuous oil supply, and read the actual data for yourself.

upinak on April 24, 2008 at 11:30 PM

Yeap made some serious money today on my stupidity. If being this stupid makes you this amount of money in a day I’m glad all you “smart” people continue to work and wonder why things are the way they are and bitch and moan about things they don’t understand. Got to love that Potash company. Moved $13.00 today. I wonder why it moved $13.00 maybe I was just “stupid” lucky to know it was going to move up in price today. It had nothing to do with supply, demand of the stock, of the fertilizer, of the recent selloff of the stock, its earnings, its projections, it’s chart formation, its relative strength, the rest of the market, the strength of the dollar, the price of oil, the price of soft commodities. Nope it was just stupid lucky I guess.

Scotty as much as it hurts me to say this, since you and I are on the same page. Dept of Energy for Alaska do not have those files. Nor does the A.O.G.C.C. you will have to ask the USGS or BLM, who have those files in Confidential Indefinate.

I know because I asked for some of the special files way back when. When they said they would not release them I asked why. The reasoning was because even if there is a “Discovery Well” and it has been released to the public for their own knowledge, the files will forever be unattainable via the BLM rules and regulation. It is the Federal Governments way of always keeping confidential information that is of public use.

A.O.G.C.C. holds almost all the records for any and all wells and files, including mud logs, resistivity, gamma.. etc. They only have a few that are concidered Confidential Indefinate due to laws the State of Alaska provide for the Oil caompanies. But those Wells eventually become public.

I do not understand why BLM is like that. USGS is not like that anymore and I have actually been in their “storage room” to look over old well history files for the Cook Inlet and a few other wells or fields like Katalla, which is under BLM but no records are found.

Ticks me off to no degree!

Then when the tax returns, things could be worse. Highlighting tax issues and putting Obama in the uncomfortable position of talking about issues he clearly knows nothing about is politically worth potential risks.

Faith in the American people is always a good defense. for McCain.

1. Stop all this crap about bears, eagles, and man-made global warming and instead open up ANWAR and the gulf to oil exploration and production.

2. Stop looking at ways to grab more power through peddling of social do-gooder legislation and look for ways to increase the freedoms we were promised by the Constitution.

I’d vote for this type of candidate in a heartbeat, Republican, Democrat or Libertarian!!!

To paraphrase Daniel Day-Lewis, “There’s a whole ocean of oil under our feet, and nobody can get at it…PERIOD”

I cannot for the life of me see one good reason for our country’s failure to produce a new oil refinery at any time during the last 32 years. Nothing threatens our country’s safety and prominence more than a looming energy crisis, and skyrocketing fuel costs and shortages. If you ask me, every single politician who stands in the way of building new refining capacity in this country AND allowing encouraging drilling in both ANWR and the Bakken Oil Formation should be tried and hanged for treason. I’m not joking. And as it should always be, failure to step up and introduce the motion and provide leadership should be tantamount to obstruction. We should start the trials with Hagel, and continue down the line until somebody gets the point.
steadyrock on April 24, 2008 at 4:13 PM

I could not agree more. I live in Palm Springs, CA. Gasoline is now $4.15 a gallon and in Death Valley, a friend sent me picture of a gas station, selling Gasoline for $5.45 a Gallon.

People can debate all they want, this energy crisis is because of Congress obstructing and manipulating energy policy. I lived through the last major engineered gas crisis back in the 1970’s and had to sit in line for hours to get my car filled up.

Back in 1976, Arco discovered the largest oil reserves in the world at Gull Island and 3 other fields on the North Slope but the US Department of Energy ordered the wells capped.

Arco also discovered huge natural gas fields that have been ordered by the US Government to be pumped back into the ground. Our own Government has stopped production on the Alaskan North slope and has created this so called Energy Crisis.

Here is a quote I saved from 1976; Atlantic Richfield pipeline executive: “In my estimation, from the seismographic work and the drillings we have already done, I am convinced that there is as much oil under the North Slope of Alaska as there is in all of Saudi Arabia.” “When these wells are brought on line, America will finally be energy independent”.

These are the fields; Prudhoe, Kuparuk (Twice the size of Prudhoe), Gull Island and Pay Zone Oil. This is not the ANWR discovery or the Prudhoe Bay fields.

Gull Island was capped, then a year later, Congress declared Gull Island a nature preserve for the sea gull. The last time I checked, the sea gull is not an endangered species.

I checked this story out and the permits were pulled back in 1976, do a google at the Alaskan Department of Energy.

We are being lied to and our economy is being destroyed in the name of man made Global Warming and Conservation.

Steadyrock is right when he says these people need to be tried for treason. America is sitting on the largest known oil reserves in the world yet we are importing oil and capping wells. This situation just may result in another great depression.

What kind of insanity allows our own Congress to destroy our economy and our way of life for some unknown environmental agenda.

The ethanol mandates that GWB recently signed into law are resulting in Global Food shortages and famine in some third world countries. Because of the ethanol fuel mandates alone, Food prices have increased by 37% last year because the price of corn that is used to make ethanol has tripled in price.

The old hogwash about getting “energy independent” and helping corn farmers keeps building votes- pushed by an aggressive phalanx of paid association liars and bought politicians. . . . The corn gluten angle and even the fact that ethanol reduces engine life and delivers lower gas mileage than conventional unleaded seems a tad too complicated for Congress to pick up on.

Rather than putting together proposals to allow more drilling and to build more refineries they are putting together proposals to ban the sale of Playboy and Penthouse on military bases. Just ridiculous but it goes to show that they don’t give a rats a_ _ about the American people.

All they care about is controlling the American people. For Gods sakes our military men and women are old enough to decide for themselves if they want to buy these magazines. They don’t need Congress to protect them. They need Congress to concentrate on things, like finding and refining more oil, that make our economy run.

The founding fathers,if they were around today, would start another revolution to get government out of “social do gooding” business and back to “The peoples’ business”.

Freedom has taken a back seat to Pandering, Influence Peddling and Socialism. It’s a shame but we need to get our country back.

LMFAO HAHHAHAHAHAA you are a trader. Whoopty DOO! Until you have actually worked in a Oil/Gas company, worked on a oil field, dealt with Federal/State/City governments and EPA on all issues and then have to deal with Economic relay guys who understand it a little bit more then you. I would highly suggest you stop giving advice and just buy them stocks. People like you are a thorn … seriously. Or better yet, become a roustabout and then come and talk to me about supply and demnad by how much you work.

LMFAO good Lord people come in all shapes and sizes of stupid!

It is not so much the individual speculators has it is the major hedge funds. The trade for the last several months has been to short the dollar and go long commodities. that includes oil/gas/wheat/corn/cotton etc. since the falling dollar makes the prices of those things more. therefore it’s like adding NO to your returns. If the dollar falls 10% and oil goes up 50% you just made 60%. this trade has been working extremly well. today the dollar rallies and oil fall $3.00. wheat and corn also fell in fact all commodities fell. One of the little known things about this trade to the avg person is that the markets in commodities is relatively small compared to say the forex market or the stock market. So if the dollar continues to rally then the trade will quickly and sharply move to long dollar denomated assets like stocks and out of commodities. The commodites will correct sharply because of the small markets. therefore I would not be surprised to see (if the dollar strengthens) $800.00gold/$80- 90.00 oil and corn and wheat give up large parts of its move in a matter of days or weeks. Commodites increase like a staircase and fall like an elavator.

gasoline will of course stay relatively high until the refiners can recoup their profit margins.

I’m a trader mostly stocks and options. Knowing the oil markets/gasoline markets/gold markets/soft commodities markets/stock markets/bond markets etc and why they are trading the way they are is needed to be able to make money.With the record prices refiners should be swimming in profits they are not. If supply was an issue they would be yelling from the highest rooftops for more refiners to be brought online. Again they are not. they would be running advertisments on TV and in the newspaper urging congress to pass bills to speed the way for quicker approval again they are not. They should be ramping production going into the summer driving period they are decreasing production. The margins are not there. They have to decrease supply of gasoline or increase supply of oil to get the margins right. Neither are happening. Supply is not the reason for high prices.

They were at ~81% last wed. so what about that story is a fantasy to you? Refiners can not make profit margins because of less demand so why would they want more refineries built that would increase supply? They are making less gasoline (old levels 90% vs new 81%-85%) during times of record gas prices. They should be making 95% if supply was short and more refiners were needed. the story you quote basically explains why building more refineries is not what the oil companies want. They want less supply and/or more demand to push prices higher. If they wanted more refineries they would build them or expand their present operations. they are doing neither. the goal of the oil companies is not to bring prices down it is to maximize profit and to hell with everything that gets in their way like the consumer of said product or the national economy.

also notice in your story that supplies are 7% more than last year. this should make gasoline cheaper than last year more supply less demand should cause prices to decrease to get rid of inventory. this is not the case. Why is that? funny how gasoline ignores the law of supply and demand that almost all other industry’s must observe.

funky chicken on April 24, 2008 at 5:56 PM

that’s part of it, the weak dollar is a major cause. today for example the dollar rallied and oil fell $3.00. Other parts include security issues, increase in worldwide demand, believers in peak oil theory and don’t forget that oil is controlled in large parts by a cartel which controls supply to fix prices in a certain range. saber rattleing by Chevaz and Iran doesn’t help either. Lots of reasons for fear and greed to push prices higher.

Ahhh Sarah is a Alaskan, born and raised. But yes we both love her. BTW she just HAD a baby boy and is BACK to work not even a week afterwards.. her 5th child! She ROCKS!

That’s because Sarah Palin is a freaking robo-trooper. I love that gal. (The fact that she shares my homestate of Idaho and graduated from my Alma Mater doesn’t hurt either.) If she doesn’t maker her way onto a GOP presidential ticket within the next decade, I hope at least she makes it to Secretary of Energy or Secretary of the Interior.

unseen on April 24, 2008 at 5:21 PM

More on declining refinery profits:

But earnings fell sharply on the refining and marketing side, to $502 million from $1.14 billion — a decline ConocoPhillips said earlier this month was expected.

The root of the problem was refining margins, which were squeezed by higher crude prices. Those margins reflect the difference between the cost of crude and what the company makes on refined products such as gasoline.

Industry observers expect other large integrated oil companies to face the same problem.

The issue — which is more acute for independent refiners — is that the jump in prices on refined products such as gasoline, while shockingly steep to consumers, has not kept pace with the rapid increase in crude prices. In fact, U.S. drivers have actually been cutting back on gas consumption, helping keep pump prices lower than they might otherwise be, experts say.

“The surge in crude prices squeezed refining margins to their lowest levels in years, as refiners were unable to offset the rise in crude costs through higher product prices due to weak demand,” Oppenheimer & Co. oil analyst Fadel Gheit said in a report this week.

unseen on April 24, 2008 at 5:32 PM

Interesting. unseen, what is it you do? Since I am working with oil companies right now, and most of them deal with a refinery here in my State (actually 6 of them), I know what they have to deal with and what they do and do not make. Gasoline is not made up here, and has to be imported.
Thanks for the interesting analogy though.

unseen on April 24, 2008 at 5:21 PM

The answer can be found in this CNN story which I can’t link to because for whatever reason CNN links don’t work here:

Oil steady after mixed supply data

Please note that the refineries are at 85.6% of capacity, not the 80% you claimed.

Gasoline demand is averaging 9.3 million barrels per day over the past month, a 0.9% increase over the same period last year. The rate of increase is less than usually seen this time of year, according to Flynn, who indicates that demand has been relatively flat for 2008.

That’s because gasoline prices are at historic highs. Gas hit a new record of $3.533 a gallon on average, motorist group AAA reported Wednesday.

According to the EIA report, refinery usage was higher than the previous week but still low for the upcoming summer driving season. Refineries operated at 85.6% capacity last week, less than the usual 90% for this time of year.

Refinery supplies are 7% above where they were a year ago, but with slumping demand and such a high cost of crude oil, refineries have not matched their usual output, according to Flynn.

“There’s no incentive for these guys to produce gasoline,” said Flynn. “Why would you make more of a product when people are buying less of it?”

I can’t think of any other reason why oil would be $120 a barrel, so perhaps that’s right?

you are confusing the excuses for the reason. the reason is that the crack spread is at low levels and they can not make money on gasoline at present oil prices. the list you mention is excuses the refiners are using to justify the decrease. imagine the outcry from the population if VLO came out and said “we are going to decrease supply of gasoline because it isn’t high enough for us to make the profit we want.”

You number 4 is partly true. There is huge demand for disel in Asia and europe and the margins are better for disel than gasoline at the moment so the refiners are shipping disel overseas.

unseen on April 24, 2008 at 5:21 PM

They are working at 80% because:
1. They are old,
2. They have issues finding or making replacement items for said refinaries,
3. They are not up to standards of EPA and close down certain portions,
4. They, in working with and in conjunction of oil, process certain viable oil based products dependong on what the Owner of the oil is asking.

It isn’t that I don’t agree but you don’t have all your facts together.

Indy Conservative on April 24, 2008 at 5:01 PM

Wahington Dc would never run out of fuel.

unseen on April 24, 2008 at 5:15 PM

Not even during Hussein Banana O’Bamba’s Administration???

He promised us “change” !!

Crap!