If refinery production is tight...why 3 blends?

[twintornados]

I have a question about refinery capacity. If the oil companies keep saying that refinery capacity is limited, why do they continue to make three (or more) blend/octane ratings for gasoline. During this crisis, shouldn't they drop "high test" and concentrate on just regular and midgrade? Is this an overly simplistic idea?

[ktpworker69]

I have a question about refinery capacity. If the oil companies keep saying that refinery capacity is limited, why do they continue to make three (or more) blend/octane ratings for gasoline. During this crisis, shouldn't they drop "high test" and concentrate on just regular and midgrade? Is this an overly simplistic idea?

 

there are actually people that think thier car has to have high grade gasoline. blame this on auto manufacturers. all vehicles should be assembled to run on regular unleaded fuel.

 

this whole "supply and demand" theory is bullshit. if demand is that high.......make more gas, not charge more for it. when we lose production at KTP, we dont raise the price of our trucks, we just make more. go figure................

[cal50]

http://www.gao.gov/docsearch/abstract.php?rptno=GAO-05-421

 

For a short time during hurricane damage the various mandated blend requirements were suspended to ease the load on refineries. Thank the EPA for higher cost. I am not against clean air and water but some of the unfunded mandates passed off to the consumer has to end.

[twintornados]

I used to serve on a board of education in my home town so I know the pain in the wallet unfunded mandates can inflict. I seriously do not believe that providing refinery space to blend 93+ octane fuels makes much sense right now as costs spiral upward with no end in sight. I know some of the performance guys will squawk that they "need" it for the hi-po cars they drive....but we are facing a crisis and this seems like a logical step to ease the burden of a limited refinery schedule. When more refineries are brought on line, then high test production can resume. But my guess is, that won't happen since higher profits come from high test fuels.

[chassisgrunt]

three blends, you're complaining about three blends??? due to liberal lawmakers, the refineries have to make over THIRTY different blends to accomodate all of the environmental policies that different cities place on fuel being sold there.

[NLPRacing]

I may be wrong, but don't they add the higher octane at the pump?

[falconman13]

The octane is set in the blending process at the refinery. There is a pretty good diagram at the link below, It shows the basic process.

 

http://www.chevron.com/products/prodserv/f...500/fig_3-4.gif

[Jimmy G]

I think they should pick the cleanest formula and sell it nationwide. Get rid of these "boutique" blends sold all different regions and just have one.

[cal50]

I think they should pick the cleanest formula and sell it nationwide. Get rid of these "boutique" blends sold all different regions and just have one.

 

 

Yep.

[AH-HA]

Blame your local politicians for the "blend" situation. With each state requiring different blends for different seasons throughout the year and for supposed environmental reasons, refinery capacity is strecthed thin leaving us, the good old American consumer, getting the shaft. It should be simple, pick the best blend for everyone and use that one nationwide. The capacity issue has much less to do with the octane levels than this "blend" issue.

[Furious1Auto]

I have a question about refinery capacity. If the oil companies keep saying that refinery capacity is limited, why do they continue to make three (or more) blend/octane ratings for gasoline. During this crisis, shouldn't they drop "high test" and concentrate on just regular and midgrade? Is this an overly simplistic idea?

Refinaries use the three grades of gas to establish pricing. If a high number of people buy hytest then they know that people have money to spend and will raise the cost of regular unleaded. When few people buy it they know there at the high end of what the market will bare. If everyone where to stop buying hytest then it would take away one of their marketing tools. They would be flying blind! Don't buy gas May 15, 2007 I'm not buying the 15th the day before or the day after. The week of the 15th just buy regular unleaded when you do buy. Flood them with inventory and it will lower the price! It's always a buyers market if a service or commodity does not sell at the current price they will lower it. Whatch what happens to the prices of housing when all of the ARM loans are defaulted on! Flood the market and the price will drop. A service or commodity is only worth what people are whilling to pay! If we take no action and allow them to continue to charge the current prices they will become dependant on it by creating new debts. Once this happens If we take action we run the risk of putting them in the negative and eventually out of business. This will cause the cost of gas to soar even higher than it is now. If I didn't absolutly need gas I would not buy until it hit $1.95 a gallon. We know this is still a sustainable price for them!

Edited May 8, 2007 by Furious1Auto

[Raws41900]

"If a high number of people buy hytest then they know that people have money to spend and will raise the cost of regular unleaded. "

 

that made no sense.. by that logic, since there are a bunch of people that like to exotic cars, the price of the focus should go up? no. if more people bought high octane gas, then high octane gas might go up in price with supply/demand, not regular.

[Len_A]

I have a question about refinery capacity. If the oil companies keep saying that refinery capacity is limited, why do they continue to make three (or more) blend/octane ratings for gasoline. During this crisis, shouldn't they drop "high test" and concentrate on just regular and midgrade? Is this an overly simplistic idea?

 

 

there are actually people that think thier car has to have high grade gasoline. blame this on auto manufacturers. all vehicles should be assembled to run on regular unleaded fuel.

 

this whole "supply and demand" theory is bullshit. if demand is that high.......make more gas, not charge more for it. when we lose production at KTP, we dont raise the price of our trucks, we just make more. go figure................

First, there are cars whose engines are designed to run on premium. And it's true that there's a good number of people who are misinformed and think higher octane is better.

 

What's screwing things up, vis-a-vie refining capsity, isn't the three grades of gas. Like chassisgrunt said, it's the multitudes of EPA mandated regional blends. Plus now all fuels have to have less sulfur in them. That means that the refineries have to run at slower speeds, essentially giving up capsity, in order to refine the sulfur out of the fuel, be it gasoline or diesel.

 

ktpworker69, as far as your comment that "this whole "supply and demand" theory is bullshit. if demand is that high.......make more gas", sorry, but that's the way it is. I sold to the refineries in the Michigan and Ohio are for ten years. Refining capacity in the USA and Canada is maxed out. Some refineries were shut down over ten years ago, because it wasn't financially feasible at any price to put money into them to make cleaner burning fuels, due to those refineries age. And it's no longer just USA, or North American refining capacity that's maxed out. It's now a world wide problem. You would think the simplest solution is to expand the refineries or build new ons, but this isn't off-the-shelf technology. It's all custom built to order, and just the design of a refinery expansion takes two years to do in the USA or Canada, due to all the paperwork that needs to be signed off on. New refinery? Forget it. We may need them, but the "not-in-my-backyard" mentality makes building a new refinery in North America as likely as ET being voted President.

[Furious1Auto]

"If a high number of people buy hytest then they know that people have money to spend and will raise the cost of regular unleaded. "

 

that made no sense.. by that logic, since there are a bunch of people that like to exotic cars, the price of the focus should go up? no. if more people bought high octane gas, then high octane gas might go up in price with supply/demand, not regular.

When attempting to justify raising the cost of a low end product don't the manufacturers point to what people are paying in more expensive markets? When they raise the price of gas don't they tell you how much people are paying in California and, other countries to make you feel lucky? Simply selling Three grades of gas gives them a feel for the size of the fuel consuming market and, what they are whiling to pay! The higher they can push hytest the higher regular unleaded will go. They raise the prices on all three at once. When you pay 3.20 a gallon don't you feel good to know that your not paying 3.70 for hytest. Although there is much other information that can be concluded from their demographics! When the cost of a Lincoln hit $40,000 the cost of a focus went to $16,000. Now because of the fierce competition the market will bare less for a focus. Now the cost of a focus is where it should be, at $10,000. If the focus can not be profitably sold for this price the manufacturer will have to cut cost as we're seeing now and if they still cannot put it in the black. They will discontinue the product and lay off workers. Or try to sell it in markets where they can get the price they demand!

Edited May 8, 2007 by Furious1Auto

[FANTASTICFORD]

three blends, you're complaining about three blends??? due to liberal lawmakers, the refineries have to make over THIRTY different blends to accomodate all of the environmental policies that different cities place on fuel being sold there.

If you go back and read twintornados post, you would see that this person is asking a question, it's not a complaint and so far some of the replies are good answers.

Edited May 8, 2007 by FANTASTICFORD

[ktpworker69]

there are actually people that think thier car has to have high grade gasoline. blame this on auto manufacturers. all vehicles should be assembled to run on regular unleaded fuel.

 

this whole "supply and demand" theory is bullshit. if demand is that high.......make more gas, not charge more for it. when we lose production at KTP, we dont raise the price of our trucks, we just make more. go figure................

 

First, there are cars whose engines are designed to run on premium. And it's true that there's a good number of people who are misinformed and think higher octane is better.

 

What's screwing things up, vis-a-vie refining capsity, isn't the three grades of gas. Like chassisgrunt said, it's the multitudes of EPA mandated regional blends. Plus now all fuels have to have less sulfur in them. That means that the refineries have to run at slower speeds, essentially giving up capsity, in order to refine the sulfur out of the fuel, be it gasoline or diesel.

 

ktpworker69, as far as your comment that "this whole "supply and demand" theory is bullshit. if demand is that high.......make more gas", sorry, but that's the way it is. I sold to the refineries in the Michigan and Ohio are for ten years. Refining capacity in the USA and Canada is maxed out. Some refineries were shut down over ten years ago, because it wasn't financially feasible at any price to put money into them to make cleaner burning fuels, due to those refineries age. And it's no longer just USA, or North American refining capacity that's maxed out. It's now a world wide problem. You would think the simplest solution is to expand the refineries or build new ons, but this isn't off-the-shelf technology. It's all custom built to order, and just the design of a refinery expansion takes two years to do in the USA or Canada, due to all the paperwork that needs to be signed off on. New refinery? Forget it. We may need them, but the "not-in-my-backyard" mentality makes building a new refinery in North America as likely as ET being voted President.

 

well, not to argue but......i dont think thats "the way it is". i hear on the news all the time(at least 2 or 3x a week) about certain refineries that are only running at 80% or 90% capacity. work at 100% capacity, i do. just because the refinery isnt working up to its full potential doesnt mean the price should go up. what does that prove by raising the price 30 cents a gallon? nothing. do they think people will buy less gas because they gouge the price? the oil companies are a big scam, anytime you make 10 billion in profit in 3 months.....you are fucking people, and there is no excuse for it. oil companies know that people are gonna buy gas at $1 a gallon or $5 a gallon, its about making money. its called CORPORATE GREED and i'm fed up with it

Edited May 8, 2007 by ktpworker69

[Furious1Auto]

well, not to argue but......i dont think thats "the way it is". i hear on the news all the time(at least 2 or 3x a week) about certain refineries that are only running at 80% or 90% capacity. work at 100% capacity, i do. just because the refinery isnt working up to its full potential doesnt mean the price should go up. what does that prove by raising the price 30 cents a gallon? nothing. do they think people will buy less gas because they gouge the price? the oil companies are a big scam, anytime you make 10 billion in profit in 3 months.....you are fucking people, and there is no excuse for it. oil companies know that people are gonna buy gas at $1 a gallon or $5 a gallon, its about making money. its called CORPORATE GREED and i'm fed up with it

I agree and, in some cases conservation will happen. But what in my case, I do not drive unecassarily and, do not run up my RPM's. I also don't idel if I can help it. I have no more room for cut back. The only way I can save is to buy a motorcycle and, the fuel savings would not justify the payment and insurance. I would pay more in the added expense than I would save in fuel! We need alternative fuel to be more readily available and, at a price we can afford! Make them compete that's what the auto consumers are doing to Us. And rightly so, No car or house should be selling at these levels! Not when the average single income is $7.00to $10.00 an hour!

Edited May 8, 2007 by Furious1Auto

[ktpworker69]

I agree and, in some cases conservation will happen. But what in my case, I do not drive unecassarily and, do not run up my RPM's. I also don't idel if I can help it. I have no more room for cut back. The only way I can save is to buy a motorcycle and, the fuel savings would not justify the payment and insurance. I would pay more in the added expense than I would save in fuel! We need alternative fuel to be more readily available and, at a price we can afford! Make them compete that's what the auto consumers are doing to Us. And rightly so, No car or house should be selling at these levels! Not when the average single income is $7.00to $10.00 an hour!

 

i feel really sorry for those that make 7 to 10 dollars an hour. i make 3X that and its tight for us sometimes, so i can only imagine. unnecessary

driving is definately cut back. i try to not raise my RPMs too much either, but with a mustang gt, sometimes ya just have to! lol......my next ride is gonna be a moped!!!

[Len_A]

well, not to argue but......i dont think thats "the way it is". i hear on the news all the time(at least 2 or 3x a week) about certain refineries that are only running at 80% or 90% capacity. work at 100% capacity, i do. just because the refinery isnt working up to its full potential doesnt mean the price should go up. what does that prove by raising the price 30 cents a gallon? nothing. do they think people will buy less gas because they gouge the price? the oil companies are a big scam, anytime you make 10 billion in profit in 3 months.....you are fucking people, and there is no excuse for it. oil companies know that people are gonna buy gas at $1 a gallon or $5 a gallon, its about making money. its called CORPORATE GREED and i'm fed up with it

I don't think you get it - with the EPA mandate for low sulfur fuel, running at 80 to 90% capacity is the best they can do. That's how the refining process works - you want to purify the fuels more, you have to run the process slower, and it's the federal government that mandates the lower sulfur content (in order to protect the catalytic converters). That, plus the remaining refineries working with damage from fires, plus scheduled maintenance outages, and there is no running at 100% capacity. The point that you work at 100% of capacity is an irrelevant apples-to-oranges comparison. Supply is in part determined by how much refining capacity we have, and our refining capacity is permanently hamstrung by these fuel mandates. So, no, there is no working at 100% of capacity, and there is no increasing capacity. With supply adversely affected by these stupid fuel mandates, prices go up, and yes, the oil companies benefit from it. And as long as the "not-in-my-backyard" crowd get their way on stopping existing refinery expansion and/or new refinery construction, the oil companies have some unwitting allies in keeping oil company profits high. Plus until the oil companies are 1000% certain (that is a thousand percent, not a typo) that oil will never drop below $45 a barrel ever again, they've been blunt in saying they won't commit to building any new refineries, any where in the world. Add to that the fact that Venezuela and Iraq have publicly said they don't support the price ever dropping below the $50 a barrel range, and I doubt if the gas price situation improves ever again in our life times.

 

ktpworker69, you may not even realize it, but a percentage of the gasoline you and I buy isn't even refined here in the USA - it's imported. Not only do we import crude oil, we import refined petroleum products, and that includes fuel.

[ktpworker69]

I don't think you get it - with the EPA mandate for low sulfur fuel, running at 80 to 90% capacity is the best they can do. That's how the refining process works - you want to purify the fuels more, you have to run the process slower, and it's the federal government that mandates the lower sulfur content (in order to protect the catalytic converters). That, plus the remaining refineries working with damage from fires, plus scheduled maintenance outages, and there is no running at 100% capacity. The point that you work at 100% of capacity is an irrelevant apples-to-oranges comparison. Supply is in part determined by how much refining capacity we have, and our refining capacity is permanently hamstrung by these fuel mandates. So, no, there is no working at 100% of capacity, and there is no increasing capacity. With supply adversely affected by these stupid fuel mandates, prices go up, and yes, the oil companies benefit from it. And as long as the "not-in-my-backyard" crowd get their way on stopping existing refinery expansion and/or new refinery construction, the oil companies have some unwitting allies in keeping oil company profits high. Plus until the oil companies are 1000% certain (that is a thousand percent, not a typo) that oil will never drop below $45 a barrel ever again, they've been blunt in saying they won't commit to building any new refineries, any where in the world. Add to that the fact that Venezuela and Iraq have publicly said they don't support the price ever dropping below the $50 a barrel range, and I doubt if the gas price situation improves ever again in our life times.

 

ktpworker69, you may not even realize it, but a percentage of the gasoline you and I buy isn't even refined here in the USA - it's imported. Not only do we import crude oil, we import refined petroleum products, and that includes fuel.

how about getting the democraps to allow us to drill for oil in alaska?? then we dont rely fully on foreign oil supply.

[KWMJ-KTP]

if demand is that high.......make more gas, not charge more for it. when we lose production at KTP, we dont raise the price of our trucks, we just make more. go figure................

 

 

I agree. People can say refineries are at or near 100% capacity all they want, but that means nothing when there is no plan to fix that problem. When just one company makes $40,000,000,000 in one year, there is absolutely no excuse that they are not putting up another refinery to meet demand. Well actually, there is one reason, if you starve the market, people will pay more to get what production is available.

 

I'm just waiting for a major hurricane to head towards Florida or Texas, as gas prices are certain to go straight to $3.99 2 days before it even makes landfall. I'm just curious as to why up until about 2 years ago, weather seemed to have very little effect on pricing, but now anytime someone farts, prices surge 15%.

 

About 6 weeks ago, gas was down in the $1.80 range, what has happened in this time range to cause the price to nearly double to $3.19?

[sprinter]

how about getting the democraps to allow us to drill for oil in alaska?? then we dont rely fully on foreign oil supply.

 

 

We export over 1 billion barrels per day of oil to asia (data from 2004 https://www.cia.gov/cia/publications/factbook/geos/us.html) from alaska. The government would probably send them that too.

[fmccap]

The Great Oil Robbery

In case you're wondering why crude oil prices are down from last year, hanging around at about $60 a barrel, while gasoline prices have soared past $3.10/gallon nationwide, just check out the latest profit reports from the oil companies. They are at record levels.

 

The answer for this seeming contradiction is simple: Americans are being robbed blind by the oil industry.

 

Sure, the oil companies, and their PR and lobbying agency, the American Petroleum Institute, will give you all kinds of reasons for higher gasoline prices at a time of falling crude prices: problems at two refineries in Texas and Oklahoma, rising demand or whatever. But the real answer is that there is simply no competitive market in this industry.

 

As Tim Hamilton, a researcher and petroleum industry consultant with the Foundation for Taxpayer and Consumer Rights, observes, the oil companies all store their crude oil and refined gasoline in the same tanks, and all know exactly how much inventory each other company has, so they don't have to meet and collude on pricing in order to reap the huge rewards of deliberate supply constraints.

[sim]

In the past few months we have practically halved our gas bill by sharing a ride to work each day. Sure it means a loss of some independence and having to make a small sacrifice in time at work (ie she needs to be slightly earlier than i do and i have to stay slightly later than she does), but it works for us and has reduced our bill, not to mention cutting back on our annual mileage.

 

Personally i think the idea of the boycott of gas stations on 5/15 is just a load of crap, people will buy the gas at some point either earlier or later in the week. The only way to hurt the gas companies in the pocket and save a bit of green yourself given what you already have in your driveway is to reduce the gas used - either drive more conservatively, carpool or avoid multiple little trips for one round trip and such thinking. That'll save you more money and cut back on demand a lot more than a single day or protests!

[fmccap]

In the past few months we have practically halved our gas bill by sharing a ride to work each day. Sure it means a loss of some independence and having to make a small sacrifice in time at work (ie she needs to be slightly earlier than i do and i have to stay slightly later than she does), but it works for us and has reduced our bill, not to mention cutting back on our annual mileage.

 

Personally i think the idea of the boycott of gas stations on 5/15 is just a load of crap, people will buy the gas at some point either earlier or later in the week. The only way to hurt the gas companies in the pocket and save a bit of green yourself given what you already have in your driveway is to reduce the gas used - either drive more conservatively, carpool or avoid multiple little trips for one round trip and such thinking. That'll save you more money and cut back on demand a lot more than a single day or protests!

Alot of people have done these things but unfortunately demand seems to always rise.