Bush an Oil Tycoon, or a President?

oldman · 05-19-2001, 02:56 AM

"The oil industry has eliminated most of this by merging, so it allows them to price fix for a higher profit. (See record profits while most other industries are getting setbacks due to a slowing economy)"

This shows some confusion about the facts. Unlike the big ATT monopoly oil companies don't merge to fix prices. THey do it as a matter of survival. Too many opportunistic people are forever looking to make a quick strike in the stock market by making runs at small businesses and oil companies are no exception. Big oil is looking for smaller oil companies to take over. It's a cheap and esy way to obtain reserves, refining capacity and lower debt ratios. Phillips petroleum is in the process of buying Tosco in a wholesale buyout and it should benefit both companies. Phillips has already replaced 600 percent of it's oil production in 2000 alone. This means they don't have to rely on foreign oil for their bread and butter. Buying Tosco gives them one thing. . .refineries! Tosco has no E&P (exploration and production)division and relies on the market to buy oil from anyone who can sell it to them. True, combining the two will produce the third largest oil company in the country but more importantly it will assure their survival. THe biggest single reason for the mergers is cash. Very soon the whole country will require low sulfur fuels and this costs bilions to make happen. If your small oil company doesn't have the capital to make the modifications to the refineries they will go under. It's better to have some deep pockets backing your efforts when the time comes so that hopefully you don't go under. In a few years the federal government is going to require lower cetanes in diesel fuel and the present technology required to do this would cost several hundred million dollars to implement in one refinery. Believe me it's something they are trying to plan for and have been for some time.

"15 years to build a refinery? Just wait and see what happens when the demand goes through the roof. If they can build the Mall of America here in MN in just a couple years, they can certainly pump out a refinery in like time if so desired."

Wrong Kimosabe!
Building a mall is no comparison to the engineering and permitting nightmare a refinery is. We are in the middle of a de-bottlenecking project where I work that will ultimately allow us to increase our throughput from 130,000 barrels per day to about 150,000 bpd. The design stage took three years and all it entails is one column and a reactor bed. (no not nuclear. . just a term for a catalyst bed operation)Building the thing has been ongoing for two years. This is about one fiftieth of our refinery. Remember, the towers and assorted vessels you see poking up through the skyline at a refinery have to come from Asia, (Korea, JApan etc) and they have to hire a boat to haul one of these towers to the good ole US and then make 65 miles a day to deliver it down the road. Add to this the year it takes to manufacture one.
There's a reason they don't build refineries any more and it's because by the time they do the ribbon cutting on one we'll be riding horses again. What you WILL see is the refineries we have now running with their foot to the floor and doing it as efficiently as possible. Did you know it takes 20 years to get the proper permits to build a gas fired furnace in this country? This is what Good ole George Dubya has been talking about recently.

Oh. . .and by the way. . .in case you didn't notice, the demand went through the roof about a year ago.

It's like I said, you either quit using so much of the stuff or you pay the price. I will make one prediction. . .you aren't likely to see prices go down very much in this decade.

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05-19-2001, 02:56 AM	#21
oldman Registered Member Join Date: May 2001 Location: Amarillo, Texas, 79107 Posts: 78	"The oil industry has eliminated most of this by merging, so it allows them to price fix for a higher profit. (See record profits while most other industries are getting setbacks due to a slowing economy)" This shows some confusion about the facts. Unlike the big ATT monopoly oil companies don't merge to fix prices. THey do it as a matter of survival. Too many opportunistic people are forever looking to make a quick strike in the stock market by making runs at small businesses and oil companies are no exception. Big oil is looking for smaller oil companies to take over. It's a cheap and esy way to obtain reserves, refining capacity and lower debt ratios. Phillips petroleum is in the process of buying Tosco in a wholesale buyout and it should benefit both companies. Phillips has already replaced 600 percent of it's oil production in 2000 alone. This means they don't have to rely on foreign oil for their bread and butter. Buying Tosco gives them one thing. . .refineries! Tosco has no E&P (exploration and production)division and relies on the market to buy oil from anyone who can sell it to them. True, combining the two will produce the third largest oil company in the country but more importantly it will assure their survival. THe biggest single reason for the mergers is cash. Very soon the whole country will require low sulfur fuels and this costs bilions to make happen. If your small oil company doesn't have the capital to make the modifications to the refineries they will go under. It's better to have some deep pockets backing your efforts when the time comes so that hopefully you don't go under. In a few years the federal government is going to require lower cetanes in diesel fuel and the present technology required to do this would cost several hundred million dollars to implement in one refinery. Believe me it's something they are trying to plan for and have been for some time. "15 years to build a refinery? Just wait and see what happens when the demand goes through the roof. If they can build the Mall of America here in MN in just a couple years, they can certainly pump out a refinery in like time if so desired." Wrong Kimosabe! Building a mall is no comparison to the engineering and permitting nightmare a refinery is. We are in the middle of a de-bottlenecking project where I work that will ultimately allow us to increase our throughput from 130,000 barrels per day to about 150,000 bpd. The design stage took three years and all it entails is one column and a reactor bed. (no not nuclear. . just a term for a catalyst bed operation)Building the thing has been ongoing for two years. This is about one fiftieth of our refinery. Remember, the towers and assorted vessels you see poking up through the skyline at a refinery have to come from Asia, (Korea, JApan etc) and they have to hire a boat to haul one of these towers to the good ole US and then make 65 miles a day to deliver it down the road. Add to this the year it takes to manufacture one. There's a reason they don't build refineries any more and it's because by the time they do the ribbon cutting on one we'll be riding horses again. What you WILL see is the refineries we have now running with their foot to the floor and doing it as efficiently as possible. Did you know it takes 20 years to get the proper permits to build a gas fired furnace in this country? This is what Good ole George Dubya has been talking about recently. Oh. . .and by the way. . .in case you didn't notice, the demand went through the roof about a year ago. It's like I said, you either quit using so much of the stuff or you pay the price. I will make one prediction. . .you aren't likely to see prices go down very much in this decade.