Sun Country follows suit

[MountainFreak]

What? It's Bush's fault? You forgot to blame Haliburton too. That's your great satan to you liberals. Rising oil prices? Pin most of the blame on democrats and their tree hugger buddies. It's democrats who have thrown up roadblocks to develop new oil fields in the U.S. It's democrats who have killed any new refinery being built in the U.S. since 1976. Get a clue.

Pleny of blame to go around, but I know this for a fact (have family that in the oil business in positions that would know):

There are no new refineries in the US because the oil companies DO NOT WANT THEM! Not because of tree-huggers, not because of regulation, not because of the Dems.

There is simply no incentive; why spend lots of money to build a refinery which will only increase supply of useable fuel, bring prices down, and thus lower your profits?

There are no insurmountable restrictions on building new refineries in the US, and even if there were Exxon could build them right over the border in Mexico if they wanted them badly enough.

 

[spinproof]

Pleny of blame to go around, but I know this for a fact (have family that in the oil business in positions that would know):

There are no new refineries in the US because the oil companies DO NOT WANT THEM! Not because of tree-huggers, not because of regulation, not because of the Dems.

There is simply no incentive; why spend lots of money to build a refinery which will only increase supply of useable fuel, bring prices down, and thus lower your profits?

There are no insurmountable restrictions on building new refineries in the US, and even if there were Exxon could build them right over the border in Mexico if they wanted them badly enough.

Yeah right! Building a new refinery is on the same par as building a new nuclear plant! Overregulated and priced out of reason.
The reason no one wants to do so is that to get a return on your investment makes the project itself unfeasible.

 

[MountainFreak]

You are right in a way, but you miss the point. If an oil company could build a refinery for free, it would still lose ROI, because oil prices will go down.

As to the impossibility of building a refinery, you are wrong on that too. Did you know that a US refinery is being built as we speak? It is only going in because congress practically forced it on the oil companies during the last price spike.

And again, they could build in other countries if they chose, they just don't want to.

Yeah right! Building a new refinery is on the same par as building a new nuclear plant! Overregulated and priced out of reason.
The reason no one wants to do so is that to get a return on your investment makes the project itself unfeasible.

 

[MountainFreak]

I need to expand a bit on the oil comments. Some of the price of oil is true supply demand, but as we all know much is speculation based. We all see that bad news drives prices up, but no or good news doesn't bring it down as much.

It is much like the diamond business- prices stay high on the PERCEPTION of scarcity as much as reality.

So, a new refinery is bad for an oil company. Even if in theory it could produce more oil which is still sold at a profit, the risk to the oil company is that prices will fall too much based on the perception that new refined crude is finally available. Lots of potential downside, few upsides. Plus, it would cost lots of money regulation or no regulation.

They are good businessmen, and they know their market. Too bad the airlines, and all of us are taking the hit.

One other note: the low interests rates are dropping the dollar, another reason oil is going up, totally separate from the refining issue.

 

[tyuwerty]

Westinghouse and Toshiba are in talks to build 4 new nuclear plants in the USA.

http://www.forbes.com/markets/2008/...uthern-markets-equity-cx_jc_0403markets1.html

 

[spinproof]

You are right in a way, but you miss the point. If an oil company could build a refinery for free, it would still lose ROI, because oil prices will go down.

As to the impossibility of building a refinery, you are wrong on that too. Did you know that a US refinery is being built as we speak? It is only going in because congress practically forced it on the oil companies during the last price spike.

And again, they could build in other countries if they chose, they just don't want to.

I didn't miss the point at all! The price of refining oil is added to the barrel price and passed on period.

So it doesn't matter to a refiner whether oil is at $10 or a $100 a barrel they still get their refining cost added.

The problem of a new refinery is economics make it impossible to make a profit(markup) because the price of new construction + meeting the regulatory cost price exceedes competing with the current refineries .
Hence no new refineries. If and until this is relaxed no one is going to play no matter if oil goes to a $150.

Although if it does the shipping cost from another country will certainly be feasible.

 

[MountainFreak]

Fair points. Refiners and producers are often not the same. But, they do work closely together and have their tentacles in each other. (Mutually assured profits).

I think more new refineries will happen, but we need an aggregate plan, including nuclear.

Good discussion, but I gotta go fly!

Good luck to Sun Country, ATA, and Champion people. And maybe to the rest of us too, we all need it.

 

[spinproof]

Fair points. Refiners and producers are often not the same. But, they do work closely together and have their tentacles in each other. (Mutually assured profits).

I think more new refineries will happen, but we need an aggregate plan, including nuclear.

Good discussion, but I gotta go fly!

Good luck to Sun Country, ATA, and Champion people. And maybe to the rest of us too, we all need it.

Agreed! Have a good one and I share your sentiments toward our fellow colleagues.

 

[tubelcane]

They can't go just anywhere though and build them. Didn't Chavez just "nationalize" about 5 billion worth of assets of the oil companies?

 

[gt1900]

Common guys... Its not the rifinery's.... Oil was in the 70's less then a year ago, and there weren't anyless or more refinery's as there are now. Remember, oil is traded in dollars. The lower the dollar, the more expensive the oil. Throw ontop of that the old supply and demand equasion, and also speculation, and you have $100+ a barrel oil... As far as supply and demand goes. I just read several articles that said supply and demand would equal oil in the $70-$80 a barrel range. Until we get the value of the dollar up, were all really screwed...