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This bit in the NY Times ought to get more attention:

Oil refineries across the country have been plagued by a record number of fires, power failures, leaks, spills and breakdowns this year, causing dozens of them to shut down temporarily or trim production. The disruptions are helping to drive gasoline prices to highs not seen since last summer’s records.

These mechanical breakdowns, which one analyst likened to an "invisible hurricane," have created a bottleneck in domestic energy supplies, helping to push up gasoline prices 50 cents this year to well above $3 a gallon. A third of the country’s 150 refineries have reported disruptions to their operations since the beginning of the year, a record according to analysts.

There have been blazes at refineries in Louisiana, Texas, Indiana and California, some of them caused by lightning strikes. Plants have suffered power losses that disrupted operations; a midsize refinery in Kansas was flooded by torrential rains last month.

American refiners are running roughly 5 percent below their normal levels at this time of the year.

In the old Soviet Union folks used to say that such things aren't coincidences.

It is after all, the year before an election.  Like in 2005. Like when gas prices went through the roof then.

Now it's obvious that there have been some catastrophes at gas refineries, but you'd think with record profits they could make the damned things hum; continually churning out product.

But evidently that hasn't been the case.

Gouging by maintenance neglect?

"Coincidentally" resulting in higher prices in the peak driving season?

Is this just a "passive" version of Enron's strategy of jacking up energy prices?

I report, you decide.

Originally posted to Mumon on Sun Jul 22, 2007 at 08:49 AM PDT.

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Comment Preferences

  •  Tip jar (24+ / 0-)

    "I smell a rat," I'd say except I don't know what one smells like.

    "It's better to realize you're a swan than to live life as a disgruntled duck."

    by Mumon on Sun Jul 22, 2007 at 08:43:10 AM PDT

  •  We're getting ripped off but (6+ / 0-)

    in the long term it makes little difference because oil (and gasoline) is cheap now compared to what it's going to be in a few years.

    Global crude production has peaked or plateaued while China is driving demand up. By paying more now, we are getting the economic message to cut consumption. That will reduce the coming price shock a bit.

    Yes, consolidation of refinery businesses have led to collusive business practices, I think. The Bush administration's lack of enforcement of price fixing cases leads to higher prices. But in this case, it doesn't make much difference over the longer term. Prices are going up.

    "It's the planet, stupid."

    by FishOutofWater on Sun Jul 22, 2007 at 08:52:22 AM PDT

    •  "Tension- release" (1+ / 0-)
      Recommended by:
      Winnie

      Peak oil will happen, but it is in the oil companies' interest to stave that off as long as possible by holding back supply (from places like Iraq).

      Of course China and India are indeed driving demand up, and this whole geopolitical oil-giveaway to Bush's cronies will eventually fail (and possibly give rise to some other geopolitical cabal controlling the bulk  petroleum supplies).

      But in the meantime, I say, let's have a real industrial energy policy that doesn't benefit Dick Cheney's hunting partners lucky enough to get through a hunt without being shot.

      "It's better to realize you're a swan than to live life as a disgruntled duck."

      by Mumon on Sun Jul 22, 2007 at 08:59:37 AM PDT

      [ Parent ]

  •  Check Devilstower's piece (6+ / 0-)

    on the front page too.

    link

    Let the great world spin for ever down the ringing grooves of change. - Tennyson

    by bumblebums on Sun Jul 22, 2007 at 08:57:50 AM PDT

  •  when is the last time (7+ / 0-)

    you couldn't get gas at a gas station?   When was the last time you had to wait in line to get gas?  Anyone?

    And yet we are told that prices have to go up because the refineries aren't functioning properlyand their isn't enough "capacity".   Its amazing what people will believe despite the obvious facts staring them in the face.

    •  good point! (3+ / 0-)
      Recommended by:
      cookiesandmilk, Winnie, Jagger

      How do they refine that stuff if they're not meeting US demand?

      Canada?

      "It's better to realize you're a swan than to live life as a disgruntled duck."

      by Mumon on Sun Jul 22, 2007 at 09:01:48 AM PDT

      [ Parent ]

    •  Yikes (1+ / 0-)
      Recommended by:
      MarketTrustee

      No, that proves nothing.

      When someone says "oil refineries aren't producing enough gasoline", what they really mean is "oil refineries aren't producing enough gasoline to meet demand at the old price, so price has to rise."  It doesn't necessarily mean that there's not enough gasoline to prevent outages or lines.

      Also, keep in mind that there's not a continuous pipe from the refineries to the gas stations.  We have gasoline stockpiles, which are are at extremely low levels right now.  Check the "US Gasoline Stocks" graph about 2/3 of the way down on this page:
      http://tonto.eia.doe.gov/...

      •  State of the Union (0+ / 0-)

        Bush mentioned he was increasing the Strategic Petroleum reserve.  Probably a good idea, but I'm wondering if we are paying for it twice, i.e., by out tax money and through higher gas prices.

        Democrats give you the Bill of Rights; Republicans sell you a bill of goods!

        by barbwires on Sun Jul 22, 2007 at 10:29:45 AM PDT

        [ Parent ]

  •  After Katrina in 2005 (7+ / 0-)

    there was al sorts of talk about building new refineries, but none, not even one has been started

    I think this quote speaks to this issue

    Last month, Crown Prince Abdullah of Saudi Arabia, visiting the president at his Texas ranch on April 25 [2005], chided him with the message that his country could send more oil, but the United States would not have the ability to refine it.

    Four out five sock puppets agree

    by se portland on Sun Jul 22, 2007 at 09:03:33 AM PDT

  •  Where else is failure so rewarded? (4+ / 0-)

    When he penalty for screwing up is higher profits, the mystery of refinery "problems" is solved.

  •  re (2+ / 0-)

    I just filled up my tank with Supreme Techroline yesterday for ONLY $3.35 a gallon (west los angeles.)

    You better believe they are going to slingshot back up soon..

    I was expecting $3.55.

    "Steve Holt does not fly Jet Blue." - Steve Holt

    by cookiesandmilk on Sun Jul 22, 2007 at 09:16:33 AM PDT

    •  do you listen to the car guys? (2+ / 0-)
      Recommended by:
      Unduna, Snakes on a White House

      they say there is no reason to pay for the premium stuff.  Save yourself the money. It adds up.

      •  Actually some cars now DO need premium (1+ / 0-)
        Recommended by:
        buddabelly

        I forget which, but I was surprised to see this when I was recently shopping for a new car, a purchase which I postponed, because it wasn't clear to me which was better for the long term environment, regular old gas engines with greatly improved economy, or those hybrids with lithium batteries...

        "It's better to realize you're a swan than to live life as a disgruntled duck."

        by Mumon on Sun Jul 22, 2007 at 09:59:31 AM PDT

        [ Parent ]

      •  depends on the car High compression engines (2+ / 0-)
        Recommended by:
        Mumon, barbwires

        require high octane fuel to prevent preignition which can damage an engine. Cars like Porsche, Benz, and other cars with high performance high compression engines require premium, read your owners manual, it will let you know if you need it.

        Also over time repeated use of cheap gas with less than optimal detergent additives can result in a build up of carbon deposits on the pistons and valves.

        This has a tendency to act as a sponge and reduce the pre ignition propertys of regular gas and they will start to ping if this happens to your car use premium of a reputable brand like Chevron, if the car continues to ping get it to a shop as there may be a timing problem and pinging over time can damage an engine.

        "every saint has a past, every sinner has a future" Oscar Wilde

        by buddabelly on Sun Jul 22, 2007 at 10:02:53 AM PDT

        [ Parent ]

        •  "Reputable brand?" (1+ / 0-)
          Recommended by:
          buddabelly

          It's a "quality product," to be sure, for reasons you cite, but I'd hardly call one of the traditional "Seven Sisters" a reputable brand.

          "It's better to realize you're a swan than to live life as a disgruntled duck."

          by Mumon on Sun Jul 22, 2007 at 10:07:31 AM PDT

          [ Parent ]

          •  Well pops was a troubleshooting manager (1+ / 0-)
            Recommended by:
            Mumon

            for corp stores and I did some of my early training with Chevron corp stores so I may be biased. The key is it is a high detergent, high quality gasoline that will clean the engine if anything besides a mechanical intervention will.

            "every saint has a past, every sinner has a future" Oscar Wilde

            by buddabelly on Sun Jul 22, 2007 at 10:29:04 AM PDT

            [ Parent ]

        •  well (2+ / 0-)
          Recommended by:
          Mumon, buddabelly

          i'm going to stick with the car guys on this one.  I've heard this asked multiple times on their show.  

          If you are racing a porsche I would recommend reading your owner's manual.  If not, you are just handing money to the oil companies.  And although that is nice of you to do, they don't really need it.

          •  I think I was looking at an Accura... (1+ / 0-)
            Recommended by:
            buddabelly

            Anyway, in general one ought to read one's owner's manual.

            Of course, as an engineer, I never do, and I don't floss either. ;-)

            "It's better to realize you're a swan than to live life as a disgruntled duck."

            by Mumon on Sun Jul 22, 2007 at 10:42:52 AM PDT

            [ Parent ]

            •  engineers are the worst customers sometimes. (1+ / 0-)
              Recommended by:
              MarketTrustee

              Some are so convinced their diploma means more than someones 20 years of repairing the units they design.

              After working on some of the abominations that the engineers designed and cleared for production, I've always been in favor of a 2 year field training for automotive engineers so they see first hand some of what they cause.

              Not all by any means, and just teasing you, but real in the field repair training would make cars much more servicable, and cheaper to repair for the customer.

              Although I must say the advent of CAD and computer modeling has really helped. The newer stuff is generally much easier to repair though not in all cases.

              "every saint has a past, every sinner has a future" Oscar Wilde

              by buddabelly on Sun Jul 22, 2007 at 10:50:47 AM PDT

              [ Parent ]

          •  Cadillac is another that requires premium in some (0+ / 0-)

            of their engines.

            All owners should read their owners manual and when servicing use the severe duty schedule.

            If you do this you will end up paying people like me a lot less money throughout the life of your car.

            Its easy to tell if the octane is to low for your car or if there is a mech. problem, just open the window and listen for a clattering/pinging noise on acceleration. If you hear that get it checked, its cheaper to replace a knock sensor than an engine.

            "every saint has a past, every sinner has a future" Oscar Wilde

            by buddabelly on Sun Jul 22, 2007 at 10:44:00 AM PDT

            [ Parent ]

  •  Atlas Shrugged? (0+ / 0-)

    Who is John Galt.

    Notice: This Comment © ROGNM

    by ROGNM on Sun Jul 22, 2007 at 09:26:53 AM PDT

  •  A reminder of pre war pricing (4+ / 0-)
    Recommended by:
    Mumon, Loquatrix, barbwires, Unduna

     title=

     title=

    Supply disruptions - Any event which slows or stops production of gasoline for a short time, such as planned or unplanned refinery maintenance, can prompt bidding for available supplies. If the transportation system cannot support the flow of surplus supplies from one region to another, prices will remain comparatively high.

    http://www.pueblo.gsa.gov/...

    "every saint has a past, every sinner has a future" Oscar Wilde

    by buddabelly on Sun Jul 22, 2007 at 09:38:12 AM PDT

    •  oops forgot the oil pricing (0+ / 0-)

      In 2002, the price of crude oil averaged $24.09 per barrel, and crude oil accounted for about 43% of the cost of a gallon of regular grade gasoline (Figure 1). In comparison, the average price for crude oil in 2001 was $22.95 per barrel, and it composed 38% of the cost of a gallon of regular gasoline. The share of the retail price of regular grade gasoline that crude oil costs represent varies somewhat over time and

      Same link government source

      You tell me why we attacked in the gulf.

      "every saint has a past, every sinner has a future" Oscar Wilde

      by buddabelly on Sun Jul 22, 2007 at 09:56:05 AM PDT

      [ Parent ]

  •  We are being Califonicated by the energy complex (1+ / 0-)
    Recommended by:
    Mumon

    Enron showed the way in California. Now it will becom a worldwide phenomenon of how "planned maintenance" is really a euphemism for planned mayhem by the corporate energy complex.

    Pop-gun president lying with impunity, soundbyte policies and photo opportunities

    by Dave the Wave on Sun Jul 22, 2007 at 10:11:31 AM PDT

  •  oops that's Californicated (1+ / 0-)
    Recommended by:
    Mumon

    Pop-gun president lying with impunity, soundbyte policies and photo opportunities

    by Dave the Wave on Sun Jul 22, 2007 at 10:12:26 AM PDT

  •  I'm pretty sure that any MSM story about oil (2+ / 0-)
    Recommended by:
    Mumon, MarketTrustee

    has been prompted by the oil industry, i.e., the American Petroleum Institute, or the Heritage Foundation, or some other usual suspect. That's just my first assumption, since it's so obvious that as a society we've been directed by mass media into our tragic addiction to oil and automobiles for many decades.

    For instance, about a year ago there was a big news story about a huge new oil discovery in the Gulf of Mexico. My immediate interpretation was that the story was intended to tell two lies: There is no such thing as Peak Oil (so keep using it and burn, baby burn) and there is no such thing as Global Warming (so burn, baby burn).

    Now we have considerable evidence that we are at or fast approaching Peak Oil, which, as predicted, is sending fuel prices upward fast. So to squelch that logical conclusion, the aforementioned oil industry is floating the explanation that no, it's just a few refineries with temporary technical difficulties (so burn, baby burn).

    Conclusion: Peak Oil has occured and is having its effect on prices. See:
    Psychotic Break

    A curious phenomenon worth attention from pathologists in the financial press is the now nearly complete de-coupling of the finance sector from the salient ominous trend in the oil sector: the fast-developing permanent oil export shock. By that I mean a severe decline in export ability by those nations currently supplying the US, Europe, China, and Japan -- an export decline that will far exceed actual production decline rates in Saudi Arabia, Russia, Venezuela, the North Sea, Mexico, and Iran.

    or see:
    Politicians fret over wrong crisis as Peak Oil looms

    In a stunning reversal of its previous dogmatic ‘business as usual’ stance, the International Energy Agency has belatedly accepted the reality of Peak Oil, and the huge impact the phenomenon is going to have on the entire world.

    The crucial and potentially devastating nature of the point at which humanity has used half of the world’s oil reserves - with the remaining half being overwhelmingly lower in quality, in smaller and harder to reach fields, and in less stable parts of the world – has been a BNP theme for more than five years.

    or see:

    World Oil Supplies Are Set to Run Out Faster Than Expected
        By Daniel Howden
        The Independent UK
       Thursday 14 June 2007

    Scientists challenge major review of global reserves and warn that supplies will start to run out in four years' time.
       Scientists have criticised a major review of the world's remaining oil reserves, warning that the end of oil is coming sooner than governments and oil companies are prepared to admit.

    So should I be fitted for a tinfoil hat, or is the oil industry using the MSM to lie to us, again?

    •  The story was definitely "placed" (1+ / 0-)
      Recommended by:
      Mumon

      I had the same thought, but more specifically - I see this story as having been placed by whatever PR firm is on retainer with the Petrolium lobby.

      Recently I have been perusing the NY Times looking through that lens and it's amazing to note how many stories seem to be placed by "information brokers" - paid PR firms that are hooked into the newsrooms and editorial staffs.

      This one has all the hallmarks - prominent page on placement despite the absence of a specific triggering event or crisis; the exclusive use of sources on one side of the story (Wall street petrolium analysts, oil industry spokesmen, and of course, the National Petrochemical and Refiners Association).

      The second to last paragraph makes token reference to congressinal concern about gouging, but that's the extent of the "journalist's" sense of professional balance.

      In short folks, this is pure propaganda, brought to you by the National Petrochemical and Refiners Association courtesy the New York Times. The journalist, a Jad Mouwad, might benefit from hearing from those who want him to do his job - go to the article and click on his biline and an e-mail window pops up. Go for it!

  •  Welcome to Republican economics (1+ / 0-)
    Recommended by:
    MarketTrustee

    On one hand, there's no real "conspiracy" here in the sense that the various refining executives didn't sit down and say, "let's simultaneously sabotage our refineries and drive up the cost of gas."

    On the other hand, understand this about the financial decision horizon and cultural orientation of most oil executives.  These are almost universally old white men who are primarily interested in living out their last days on earth in the royalist culture that they've become accustomed to.  They don't give a damn if their refineries all break down after they die (or even while they're still CEOs), any more than they give a damn if the global economy collapses or if global warming ruins the planet after they die.  In the mean time, these people don't make aggressive investment decisions like "gasoline prices are high and demand is tight, if we upgrade our refineries we can take market share from our competition."  Why?  If they do nothing, they make oodles of money.  If they do nothing and their competition upgrades their facilities and takes away market share, they still make oodles of money.  On the other hand, if they invest in refinery upgrades and their profitability drops because they can't keep their new refineries running at capacity or they can't make money because there is more capacity than demand or more capacity than oil to refine, then they make less money and corporate royalty -- old white Christian conservative men -- don't deal well with this kind of unpleasantness.  Furthermore, all these guys hang out at the same country clubs and executive retreats, and while they are usually careful not to do or say things that could land them on the wrong side of the Sherman Act, they definitely reinforce their group think on these matters.

    In this regard, they are much like the Beltway punditocracy.

    •  And legally, they CAN'T really (0+ / 0-)

      if it affects their bottom line (unless of course it runs afoul of other things like the EPA regs they detest so much).

      "It's better to realize you're a swan than to live life as a disgruntled duck."

      by Mumon on Sun Jul 22, 2007 at 12:01:22 PM PDT

      [ Parent ]

  •  Alternative Narrative (1+ / 0-)
    Recommended by:
    Mumon

    Burning fossil fuels to excess causes global warming, which causes wonky weather, which incapacitates refineries, causing a cutback in fuel usage and ameliorating global warming. Nice,if you can believe it.

  •  that is why refinery needs to be a Government fun (1+ / 0-)
    Recommended by:
    Mumon

    fuction....

    They can explore, extract - but once it is to be refined for consumption that should be a non-profit / government function for security and stability reasons.

    The crude should be protected and never, never be able to have private hads on the supply.

    some things can be privatized, the flow and production of oil to include envirnomental standards.

    Unleash the potential to make a difference

    by totallynext on Sun Jul 22, 2007 at 12:29:06 PM PDT

    •  I support that with some qualifiers (1+ / 0-)
      Recommended by:
      totallynext

      Oil companies should be treated like utilities; they should be required to plow back profits into capital equipment.

      "It's better to realize you're a swan than to live life as a disgruntled duck."

      by Mumon on Sun Jul 22, 2007 at 02:24:51 PM PDT

      [ Parent ]

  •  In the days of J. Paul Getty (1+ / 0-)
    Recommended by:
    Mumon

    oilmen openly acknowledged that the REAL problem with making money in their business, was how to keep the price of oil high enough to be worth the costs.  Of course, that was before the Interstate Highway System, Just-in-Time Delivery, and the massive shift away from railroads and to trucking for freight delivery. Not to mention, before air freight and Overnight Express.

    Considering that I've been hearing the "limited refinery capacity" mantra since, oh, about 1974; that I heard it repeatedly during my vision quest walkabout in Pennsylvania in 1984 (and nobody, but NOBODY was fooled then, either), I'd say that yes, it's a fairly safe bet that the companies have long-chosen to limit supply and maintain price levels by limiting their indulgence in refining capacity, which unlike raw oil supply is completely under their control.  And since this problem has been around for forty years at least, it's a safe bet that if they WANTED to fix the bottleneck, they could have.  And if our government were willing to act for the benefit of the PEOPLE, they would have rebusted the Seven Sisters on antitrust charges loooonnng ago.  But we know all about that one.

    At this point in time, though, we need to realize that Peak Oil has already been hit (last year Saudi Arabia was UNABLE to increase its production despite pleas, pressure, promises, and good-faith efforts).  Saudi Arabia and several other OPEC states have stated upfront that they no longer see any point in pumping their remaining resources any faster, when limiting production to existing capacity will eke out the supply of their dwindling cash crop while also raising the price.  And unlike our cousins in Europe, Americans have been unwilling, despite first seeing the writing on the wall in 1973, to tax gasoline upfront or insist on automobile fuel economy standards (Hummers, anybody?) or mass-transit solutions.  So, if We The People, acting through our government, refuse to place market limits on demand by artificially increasing the price through taxation, the oil companies' manipulative games at least take the place of rational social action.  And as the profits roll in, no doubt a new Democratic majority will see dollar signs and popular support in some sort of windfall profits tax on oil companies, whereas they would read only political suicide in direct gasoline taxes at the pump.

    The bottom line is, we've been going through the riches of the Permian like there was no tomorrow, but Tomorrow arrived yesterday.  SOMETHING has to be done to reduce demand, and yes, that means something that raises the price of gas somewhere commensurate to its actual costs in terms of replacement energy/resource depletion and environmental damage.  And because our society only functions by this perpetual theft from the future, putting it on a realtime energy basis will probably spell the end to Life As We Know It, The American Dream, and the Great American Military Machine.

    Yee-haw! Git yer ammo now.  When you need it, you won't be able to find it, much less afford it.

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