BS: Oil Companies Limited Refining Capacity to Drive Up Gas Prices

From: janice matchett <>
Date: Thu Sep 08 2005 - 11:59:49 EDT

First, a few comments some might find of interest before reading the
article. ~ Janice (who just got back in town last night, in case anyone
wondered. :) )

Comments begin:

"Give me a break!

There is about 13 million barrels per day of spare refining capacity in the
world today, which equals about 3/4 of total US refining capacity. We
routinely import about 1.2 million barrels per day of gasoline and
distillate fuel into the US from overseas refineries. That is roughly equal
to the output from 6 world scale refineries.

Worldwide, and this definitely is a global industry, there is plenty of
refining capacity. That capacity does need to be upgraded to handle heavier
and more "sour" crude oils. We also need more ships meeting current
environmental regulations, to make this worldwide capacity available to the
US at reasonable transportation costs.

Objective, unbiased data on this subject may be obtained here:
<> and here:

posted on 09/08/2005 10:19:49 AM EDT by

Consider the source, please: FTCR = overtly left-wing California-based
conumer "watchdog" group opposed to insurance companies, pharmaceutical
companies, health-care providers, and well, private enterprise in

>The other alternative plan discussed in the event Powerine did open the
refinery was "....buying all their avails and marketing it ourselves" to
insure the lower price fuel didn't get into the market. Read the Mobil memo

Typical emviornmental wacko half-truth. The other company "powerline" had
lower costs of production. The additional fees charged were not profits but
reflected lower costs of Powerline because of relaxed so-called
"anti-polution" standards allowed by the California Air Resources Board. (CARB)

This is a problem caused by the environmental wackos messing with commerce,
not commerce
itself. <>32

<>Oil Companies
Limited Refining Capacity to Drive Up Gas Prices
Newswire/FTCR ^ | 09/07/2005
Posted on 09/08/2005 10:01:08 AM EDT by

SANTA MONICA, Calif., Sept. 7 /U.S. Newswire/ -- The Foundation for
Taxpayer and Consumer Rights (FTCR) today exposed internal oil company
memos that show how the industry intentionally reduced domestic refining
capacity to drive up profits. The exposure comes in the wake of Hurricane
Katrina as the oil industry blames environmental regulation for limiting
number of U.S. refineries.

The three internal memos from Mobil, Chevron, and Texaco (available at
show different ways the oil giants closed down refining capacity and drove
independent refiners out of business. The confidential memos demonstrate a
nationwide effort by American Petroleum Institute, the lobbying and
research arm of the oil industry, to encourage the major refiners to close
their refineries in the mid-1990s in order to raise the price at the pump.

"Large oil companies have for a decade artificially shorted the gasoline
market to drive up prices," said FTCR president Jamie Court, who
successfully fought to keep Shell Oil from needlessly closing its
Bakersfield, California refinery this year. "Oil companies know they can
make more money by making less gasoline. Katrina should be a wakeup call to
America that the refiners profit widely when they keep the system running
on empty."

"It's now obvious to most Americans that we have a refinery shortage," said
petroleum consultant Tim Hamilton, who authored a recent report about oil
company price gouging for FTCR. (Read the report at
) "To point to the environmental laws as the cause simply misses the fact
that it was the major oil companies, not the environmental groups, that
used the regulatory process to create artificial shortages and limit

The memos from Mobil, Chevron and Texaco show the following.

-- An internal 1996 memorandum from Mobil demonstrates the oil company's
successful strategies to keep smaller refiner Powerine from reopening its
California refinery. The document makes it clear that much of the hardships
created by California's regulations governing refineries came at the urging
of the major oil companies and not the environmental organizations blamed
by the industry. The other alternative plan discussed in the event Powerine
did open the refinery was "....buying all their avails and marketing it
ourselves" to insure the lower price fuel didn't get into the market. Read
the Mobil memo at

-- An internal Chevron memo states; "A senior energy analyst at the recent
API convention warned that if the US petroleum industry doesn't reduce its
refining capacity it will never see any substantial increase in refinery
margins." It then discussed how major refiners were closing down their
refineries. Read the Chevron memo at

-- The Texaco memo disclosed how the industry believed in the mid-1990s
that "the most critical factor facing the refining industry on the West
Coast is the surplus of refining capacity, and the surplus gasoline
production capacity. (The same situation exists for the entire U.S.
refining industry.) Supply significantly exceeds demand year-round. This
results in very poor refinery margins and very poor refinery financial
results. Significant events need to occur to assist in reducing supplies
and/or increasing the demand for gasoline. One example of a significant
event would be the elimination of mandates for oxygenate addition to
gasoline. Given a choice, oxygenate usage would go down, and gasoline
supplies would go down accordingly. (Much effort is being exerted to see
this happen in the Pacific Northwest.)" As a result of such pressure,
Washington State eliminated the ethanol mandate - requiring greater
quantities of refined supply to fill the gasoline volume occupied by
ethanol. Read the Texaco memo at

FTCR is nonprofit, nonpartisan consumer group. For more information visit,
Received on Thu Sep 8 12:13:06 2005

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