Oil Refineries Are Making a Windfall. Why Do They Keep Closing?
by Evan Halper (Washington Post) Companies see only headaches on the horizon for refineries, undercutting the White House push to boost production — … Oil refineries across the country are being retired and converted to other uses as owners balk at making costly upgrades and America’s pivot away from fossil fuels leaves their future uncertain. The downsizing comes despite painfully high gasoline prices and as demand globally ramps up amid sanctions on gasoline and diesel produced in Russia, the third-biggest petroleum refiner in the world, behind the United States and China.
Five refineries have shut down in the United States in just the past two years, reducing the nation’s refining capacity by about 5 percent and eliminating more than 1 million barrels of fuel per day from the market, leaving the remaining facilities straining to meet demand.
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Even at this moment of windfall refinery earnings, when the profit margin on each barrel of oil processed has jumped from a dollar or two a year ago to as much as $18 today, investors are hardly jumping at the opportunity to enter the sector. They fear the profits are short lived. The administration’s environmental priorities — as well as rising public and corporate concern about climate change — would make many refineries obsolete in the not-too-distant future.
Building and upgrading the mammoth structures is a messy, expensive undertaking that can drag on longer than a decade, strain the finances of even the biggest fossil fuel giants and run the risk of getting abandoned before that investment is returned.
“I don’t think you are ever going to see a refinery built again in this country,” Chevron CEO Michael Wirth said in an interview with The Washington Post this month.
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At the facilities, the components of crude oil are separated and processed into fuel for vehicles and planes, as well as industrial petroleum products such as lubricants.
The last major refinery to come online in the United States, in 1977, is the one owned by Marathon Oil in Garyville, La. It is capable of pumping out 578,000 barrels per day. Since it opened, more than half the refineries in the United States have closed.
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“Just getting the equipment you need could take three years. Electric vehicles might already make up 20 percent of the car market by then. You could find yourself investing a bunch of cash to rebuild a refinery that may not be needed for long.”
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The city was emerging from the trauma of a refinery explosion that sent an enormous fireball over the area and catapulted large pieces of machinery throughout the property. A 38,000-pound fragment of the plant was hurled across the river by the explosion. Nobody was killed, but 3,271 pounds of highly toxic hydrofluoric acid leaked into the community. It can cause lung damage and severe skin burns, according to the Centers for Disease Control and Prevention.
The explosion was triggered by a pipe that had not been inspected since 1973. READ MORE
Excerpt from Washington Post: Big solar projects are facing major delays. Plans to adapt the grid to clean energy are confronting mountains of red tape. Affordable electric vehicles are in short supply.
The United States is struggling to squeeze opportunity out of an energy crisis that should have been a catalyst for cleaner, domestically produced power. After decades of putting the climate on the back burner, the country is finding itself unprepared to seize the moment and at risk of emerging from the crisis even more reliant on fossil fuels.
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U.S. climate envoy John F. Kerry suggested that nations are falling prey to a flawed logic that fossil fuels will help them weather this period of instability, which has seen gas prices climb to a record-high national average of $5 per gallon. “You have this new revisionism suggesting that we have to be pumping oil like crazy, and we have to be moving into long-term [fossil fuel] infrastructure building,” he said at the Time100 Summit in New York this month. “We have to push back.”
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But lawmakers have balked for more than a decade at making most of the fundamental economic and policy changes that experts widely agree are crucial to an orderly and accelerated energy transition.
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“There is literally nothing pushing this forward in the U.S. beyond the tax code and some state laws,” said Heather Zichal, a former White House climate adviser who is now the chief executive of the American Clean Power Association.
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In November, for instance, one of the country’s larger clean-energy projects faltered in the Northeast. Maine voters stymied plans for a transmission line that would bring enough clean electricity from hydroelectric plants fueled by dams in Canada to power 900,000 homes in New England.
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The plan was opposed by some local conservation groups that argued the lines would create an environmental menace in Maine’s North Woods and that hydroelectric power is detrimental to fragile aquatic ecosystems.
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Its troubles are indicative of a much bigger nationwide challenge in building transmission lines for all forms of clean energy. The Department of Energy reports that transmission systems need to be expanded by 60 percent by 2030 to meet the administration’s goals. And they may need to triple in capacity by 2050.
Patching wind and solar projects into the grid infrastructure that does exist, meanwhile, is increasingly challenging. Over the last decade, the time it takes to get a project online has jumped from two years to longer than three and a half years, according to the Lawrence Berkeley National Laboratory. Its researchers say grid operators are taking longer to study project viability and are overwhelmed by a dramatic rise in the number of projects in the queue.
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Only 4 percent of cars sold in the United States last year were electric vehicles. READ MORE