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As One Of UK's Biggest Refineries Prepares For Shutdown, Drivers Concerned About Gas Price Spike

Tyler Durden's picture





 

Back in 2007, BP sold its Coryton refinery, one of the largest in the UK, to Swiss refiner PetroPlus for $1.4 billion. Fast forward 5 years later where we find that shortly after PetroPlus filed for bankruptcy, and was forced to proceed with a firesale of its assets, the European end demand market is so abysmal that a buyer could not be found for even a 30% off firesale. As Reuters reports, following a failure to sell Coryton for the low, low, price of $1 billion, the refinery, in dire need of CapEx investments, will be shutting down, and taking about 10% of UK refining capacity with it. "Insolvent Swiss refiner Petroplus' Coryton refinery in the UK is likely to close after its administrator PricewaterhouseCoopers (PwC) said on Monday that it had failed to find a buyer that could pay $1 billion for the site. Petroplus filed for insolvency in December after it could not meet its debt obligations. "The current economic environment, the challenge of raising $1 billion (£625 million) of funding for the refinery, including the $150 million capital expenditure 'turnaround' project ultimately proved prohibitive in the face of an over supplied European refinery market for both buyers and investors." The Coryton refinery has a capacity to process about 175,000 barrels of crude oil per day and additional 65,000 barrels per day of feedstock. Richard Howitt, the local member of the European Parliament said: "It's a bitter blow for the workforce...I think the process was flawed and that the government should have stepped in." It will be an even more bitter blow to the island nation's motorists who will suddenly find themselves facing with other spiking prices, a shortage of gasoline, or some combination of both.

As of January 2012:

Recall from January:

Motorists are facing the threat of fuel shortages and £100 fill-ups after one of Britain’s biggest refineries went bust yesterday.

 

As well as posing a serious risk to forecourt supplies, retailers say it could see petrol prices soaring to record highs as speculators and profiteers capitalise on the disruption.

 

Diesel prices in particular are set to rise by up to 3p to a record £1.45 a litre, they warn. That would mean more than £100 to fill up a typical family saloon with a 70-litre tank.

 

MPs and unions joined the chorus warning of shortages while forecourt bosses said there was a risk of parts of the South East ‘grinding to a halt’ after supplies from the giant Coryton refinery in Essex were suspended.

In other words, 10% of UK refining capacity is about to go dark.

Coryton supplies around 10 per cent of the UK’s petrol and diesel, and 20 per cent of the total in the South East. The warnings came as Coryton’s Swiss-parent company Petroplus filed for bankruptcy with the threat to up to 1,000 UK jobs at the former BP-owned refinery.

 

But energy ministers and oil industry bosses said they were doing their best to make up the shortfall from the UK’s seven remaining refineries and by buying in from abroad. A sudden rush to the pumps, however, could trigger filling stations running dry.

Naturally, even back then it was the speculators' fault.

Profiteers and speculators in the energy markets are already poised to capitalise on the problems to push up wholesale prices which will mean hefty increases at the pumps, say petrol retailers.

 

Even before the latest crisis, the AA had warned that motorists were on course for a 2p a litre fuel price hike at the pumps – adding £1.40 to the fill-up for a Ford Mondeo.

 

The Coryton crisis could see that rise even higher, say retailers.

And now that the crisis has morphed from hypothetical to fact, it will be up to the speculators to prove the scapegoaters right. Because the last thing the UK needs as the BOE contemplates launching even more QE is an actual supply driven spike in gas prices to make the chaos complete once excess liquidity is also thrown into the mix.

 


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Mon, 05/28/2012 - 11:45 | Link to Comment LouisDega
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Long Huffy bikes. 

Mon, 05/28/2012 - 12:07 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Insolvent Swiss.

That's a crystal clear sign of shit about to have a close encounter of the rotating type.

Ah well. I predicted Switzerland's collapse the day they closed down the Letten "stock" market.

Mon, 05/28/2012 - 12:34 | Link to Comment francis_sawyer
francis_sawyer's picture

Time to float that sedan chair IPO...

Mon, 05/28/2012 - 12:37 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

slewie don't take no puffy on no huffy

disclaimer:  long schwinnTripleLindy ETF [symbol: z-BiCh3]

schwinn at kmart  also target, wM, ?

with the strong dollar, maybe prices will stop the ol'  ^^^?

Mon, 05/28/2012 - 18:22 | Link to Comment Harbanger
Harbanger's picture

Whad'ya do, give yourself a -1 ?  No one can vote with your italics.

Mon, 05/28/2012 - 12:57 | Link to Comment Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

So I wonder when Top Gear will get their chance to slag an Ampera or Volt?  One would think that power prices are an awful lot cheaper than petrol, plus no road tax!

Mon, 05/28/2012 - 20:26 | Link to Comment Bringin It
Bringin It's picture

Top Gear should be about bicycles, instead of promoting the over consumption of increasingly scarce fossil hydro-carbons to fat and lazy types.

Mon, 05/28/2012 - 17:08 | Link to Comment Nassim
Nassim's picture

There is a surplus of refinery capacity in Europe - a huge suplus. That is why this refinery went bust. Simple.

The problem is with the oil-supply, not refineries. This article is really silly.

Mon, 05/28/2012 - 11:46 | Link to Comment rtalcott
rtalcott's picture

wtf?  if you can't get a billion take less....this is bs...

rt

Mon, 05/28/2012 - 11:49 | Link to Comment moriarty
moriarty's picture

agreed. Oh lord give me price discovery

Mon, 05/28/2012 - 11:53 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

There appears to refining overcapacity there as well as here in the USA.  Coryton might not even be worth 500 million, the article DID say the refinery needs major CapEx...

Mon, 05/28/2012 - 12:03 | Link to Comment Manthong
Manthong's picture

What octane is that liquidity and how many kpg can you get from it?

Mon, 05/28/2012 - 11:57 | Link to Comment Tyler Durden
Tyler Durden's picture

As a commentator points out below, the biggest issue is not the asking price, but the ongoing maintenance requirements. It appears the refinery's asset base was so severly depleted, there is no IRR at any cost that makes sense.

For more, read:

Mon, 05/28/2012 - 11:59 | Link to Comment rtalcott
rtalcott's picture

OK...no problem with that...BUT why tf ask one billion...if it's only scrap...call it what it is and be done with it.

rt

Mon, 05/28/2012 - 13:01 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

take it apart, float it south to greener pastures, and fix it?  possibly thru this program, or one like it?  all under new bankster ownership, too;  the old shell game...

import refined products, not crude thru the same venue?  i'm in!

Tanaka: EBRD to Invest €25 billion in Energy Efficiency Projects in 29 Countries, Libya is Welcome as Member The Managing Director for Energy Efficiency and Climate Change at the European Bank for Reconstruction and Development (EBRD), Josué Tanaka, said on 18 May that EBRD is willing to expand its operations to Libya as soon as Libyan authorities decide to apply for membership to EBRD as a country of operation.
Mon, 05/28/2012 - 13:06 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

Yay!!!

...speaking of towers of flaming unicorn fartz, check this out:

IT'S OFFICIAL - George W. Bush is a War Criminal By Yvonne Ridley in Kuala Lumpur

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Bush, Dick Cheney, Donald Rumsfeld and their legal advisers Alberto Gonzales, David Addington, William Haynes, Jay Bybee and John Yoo were tried in absentia in Malaysia.

Mon, 05/28/2012 - 15:59 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

chew on this, republicunt lock-step BiCheZ!

here's the best guy on the ballot.  again. Recognizing Heroes » byRalphieNader

please read it and see whatcha think, ok?

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  3. vote for ralphie-boy!
  4. hurry!  november is comin fast!
Mon, 05/28/2012 - 20:34 | Link to Comment Bringin It
Bringin It's picture

I voted for Ralph all the time, but this time, Ron Paul is the no-war, liberty and freedom vote.

RP transcends the usual dichotomies, appears as honest as the day is long, has a great organization and is getting traction.

Tue, 05/29/2012 - 00:54 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

you are smoking better shit than i am

the candidate must win the nomination or he doesn't get on the ballot.  try checking the delegate count;  i've put it up here so many times i don't care to, again

and have fun playing here in your little sandbox, too!

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nader has been and will be

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write a letter to santa about rPaul while you're at it too, ok?  tell him what a great president he would be and have all the elves get right to work fixing the universe for you and rPaul

that's what they are there for!  so, tell santa, ok?  slewie ain't gonna be able to help you, son

Mon, 06/11/2012 - 01:26 | Link to Comment Bringin It
Bringin It's picture

Slewie - I just down arrowed my own comment.  Rand Paul just married Mit Romney!!

Mon, 05/28/2012 - 12:09 | Link to Comment greyghost
greyghost's picture

did bain capital suck the life out this company too? romney must be proud of this business model!!!!! wonder if there is any pension monies floating around in the company???? if so get hold of romney and his buddies at bain capital...NOW!!!!! calling all vampires

Mon, 05/28/2012 - 12:31 | Link to Comment Sandmann
Sandmann's picture

Not Bain but Riverside and Carlyle were the owners at one stage before offloading it in an IPO

Mon, 05/28/2012 - 12:42 | Link to Comment Crab Cake
Crab Cake's picture

So, GG. How much do you get paid for this drivel? Inquiring minds want to know. Is it by post? By hour? By word? Internship? Whats the fucking deal, really?

You smell like dead fish, and the illusory device that is th RD game is becoming ever so tired and stale. If you said this genuinely you are a fool, the other options get worse from there...

Mon, 05/28/2012 - 12:19 | Link to Comment tonyw
tonyw's picture

Also UK demand is down over 10% over the last four years and this refinery is about 10% of the UK total.

In the UK the annual car tax is based on the CO2 output which is broadly the same as fuel consumption so there is a good incentive to switch to more fuel efficient car.

For those who have a car funded by their company there is also a benefit tax again based on the CO2 output.

Going forward I would expect demand to continue to reduce over the next few years so why buy into a diminishing market??

Mon, 05/28/2012 - 15:12 | Link to Comment hbjork1
hbjork1's picture

TD: First, thanks to all the TDs that have made ZH my first "go to" site when I sit down with a connection.

This note on target as usual.  Parts of the legacy refineries may be a half century old.  If they haven't been adding modernized units as they go along, section by section, they may as well start from scratch. The modern microprocesser and computer analysis have changed everything.  The changes are significant.  Component design, process design, control, product trace component utilization and quality as well as relative energy consumption.  New world.

However, investment capital can, little by little, take care of things like refinerys.  But the situation we have leading to things like the Corzine and Rubin "malfunctions" needs to be fixed because it educates a new generation about what can be "gotten away with"and how it is done.

 

 

Mon, 05/28/2012 - 18:11 | Link to Comment CreativeDestructor
CreativeDestructor's picture

off course, with all the QE next best return is to deplete all assets... next best return after that at any price is 0%... long live central planning, at least we can just work with handfull of numbers, 0% and 100,000%...

Mon, 05/28/2012 - 11:46 | Link to Comment gojam
gojam's picture

Fact: For every £30 a Brit pays for petrol, £20 is tax/duty

Mon, 05/28/2012 - 11:50 | Link to Comment drink or die
drink or die's picture

Seriously, it's a government-caused crisis.  Although if the price were cheap, perhaps demand would spike? 

Mon, 05/28/2012 - 12:01 | Link to Comment gojam
gojam's picture

The prices shown are close to my own experience. £1.33 per litre for unleaded of which 4p goes to retailer and 1p to supplier.

Petrol stations are noticing that customers are not filling up and only putting £5 or £10 in the tank.

Petrol inflation trickles though the economy, it's not just the cost of fuel but also the costs of goods due to transportation and farming

Mon, 05/28/2012 - 12:24 | Link to Comment tonyw
tonyw's picture

The average UK price for Petrol/gas today is GBP 1.35

GBP 1.35 x 1.57 (exchange rate) x 3.785 (litres to US gallons) = USD 8.02 per US gallon

Mon, 05/28/2012 - 12:56 | Link to Comment nod2glod
nod2glod's picture

I love how we pay VAT on fuel duty. More that 50% of the VAT on fuel is due to the government adding value to fuel by putting on a >100% tax.

Mon, 05/28/2012 - 14:56 | Link to Comment Hobbleknee
Hobbleknee's picture

But you get to be denied "free" healthcare.

Mon, 05/28/2012 - 12:05 | Link to Comment LouisDega
LouisDega's picture

Bullish for Huffy bikes. I was one happy little fucker when i saw my Huffy thunder road under the Christmas tree back in the day. Thanks dad, Where ever you are.

Mon, 05/28/2012 - 11:49 | Link to Comment holdbuysell
holdbuysell's picture

As ZH has said before, the misallocation of capital continues, as more debt going to pay off debt or to pay dividends and not going toward improving the asset base is a road to disaster.

This is an excellent and timely example.

Mon, 05/28/2012 - 11:55 | Link to Comment ivana
ivana's picture

all companies which are not verticaly integrated or have no upstream are destined to die soon ... have no future at all

Mon, 05/28/2012 - 12:01 | Link to Comment EmileLargo
EmileLargo's picture

Some of the pure physical commodity traders (like Glencore etc) will survive. They have few upstream assets but it doesn't matter. They operate in a different sphere. You are right that those that are structured like Petroplus will die out. 

Mon, 05/28/2012 - 13:11 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

 

 

 

 ivana :

" all companies which are not vertically integrated or have no upstream are destined to die soon ... have no future at all "

 

Gee, um, er, isn't that monopolistic?

 

Kinda like what Rockefeller did with oil in the US (drilling, transportation, refining, retail)?

 

Wasn't the idea to get AWAY from that sort of thing?

 

/rhetorical

 

 

 

Mon, 05/28/2012 - 13:41 | Link to Comment Go Tribe
Go Tribe's picture

Hardly. It's about how you manage the slate and not buying junk refiners of which there are many. A number of refiners not vertically integrated will continue doing fine. Just not in Europe or Latin America.

Mon, 05/28/2012 - 11:55 | Link to Comment Caviar Emptor
Caviar Emptor's picture


Greeks will choose to stay in the euro, opinion polls say Greece's pro-austerity party topped six opinion polls in a sign that the electorate is heeding warnings of a “catastrophe” if Athens crashes out of the euro.

http://www.telegraph.co.uk/finance/financialcrisis/9295490/Greeks-will-c...

Mon, 05/28/2012 - 12:00 | Link to Comment Caviar Emptor
Caviar Emptor's picture

And more of the same....

We shall B-b-b-b-b-b--baiL!


(Reuters) - Greece's bank support fund on Monday disbursed 18 billion euros to the country's four biggest banks as a part of a long-planned recapitalization effort, a fund official said.

http://www.reuters.com/article/2012/05/28/us-greece-banks-idUSBRE84R0HD2...

Mon, 05/28/2012 - 12:01 | Link to Comment Alpacanio
Alpacanio's picture

NO PETRO FOR YOU!

Mon, 05/28/2012 - 12:07 | Link to Comment Elwood P Suggins
Elwood P Suggins's picture

The UK gov - or any European gov for that matter - can easily lower fuel prices by cutting the ridiculous tax rate.  Have wondered for years why the Europeans put up with these taxes.

Mon, 05/28/2012 - 12:15 | Link to Comment Fanakapan
Fanakapan's picture

UK/Europe = Small Place (s) no distance to drive and get to see a Quack for Free :)

USA = Big place lotsa driving  and get to pay Bazillions to see a physician :(

Mon, 05/28/2012 - 12:28 | Link to Comment tonyw
tonyw's picture

Also the UK has a trade defecit so any increase in demand would worsen the trade defecit.

Whilst most would welcome lower fuel prices very few would want to pay higher taxes elsewhere or agree to less government spending.

 

Mon, 05/28/2012 - 14:59 | Link to Comment Hobbleknee
Hobbleknee's picture

So you think 100% tax on gas, 25% VAT and 50% income tax = Free?

In Europe, you pay (more than your share) for health care no matter what.  In the US, you only pay if you use it.

Mon, 05/28/2012 - 16:37 | Link to Comment blunderdog
blunderdog's picture

    In the US, you only pay if you use it.

Wha?  Don't be silly.

I don't use it much, but I pay for OTHER PEOPLE'S healthcare.

Mon, 05/28/2012 - 17:37 | Link to Comment Fanakapan
Fanakapan's picture

At point of delivery Free, and thats where it matters :)

 

As for not using it, even if one is fortunate, as most are, not to be part of the small minority with Congenital problems, there's no doubt that we All get to use medical services sooner or later :(

Mon, 05/28/2012 - 12:22 | Link to Comment Sandmann
Sandmann's picture

So how do you get the fuel duty lowered ?  It is very easy to get Europeans to put up with it because they had WAR and RATIONING and SCARCITY. Britain had rationing until 1954

After the outbreak of World War II in September 1939 the first commodity to be controlled was petrol,

Rationing continued after the end of the war in 1945, although the basic petrol ration for civilians was restored when peace returned. Indeed, some aspects of rationing actually became stricter for some years after the war. Bread, which had been reduced in quality during the war but not formally controlled, was rationed from 1946 to 1948; potato rationing began in 1947.

Petrol rationing was briefly reintroduced in late 1956 during the Suez Crisis but ended again on 14 May 1957.[8] Advertising of petrol on the recently-introduced ITV was banned for a period

http://en.wikipedia.org/wiki/Rationing_in_the_United_Kingdom

http://toryaardvark.com/2011/01/24/mps-recommend-petrol-rationing-to-hel...

 

Once you live in a country where Rationing has been policy you have a completely different approach to price. It is cultural.

http://answers.yahoo.com/question/index?qid=20080920074936AA3F8ZY

Even the US Military Personnel had ration cards in Germany for petrol so they did not buy too much as cheap US prices and re-sell on the Black Market.......in 2008 !

Mon, 05/28/2012 - 12:30 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Yes, but it takes something like the Egyptians nationalizing the Suez to bring about the consciousness of fragility of this dependence. Americans have had no such experience recently plus the inflation tax is a slow numbing agent that helps mask horrendous policy.

Mon, 05/28/2012 - 12:07 | Link to Comment Rainman
Rainman's picture

The UK has nothing on California. When there's a glut of cheaper crude there's another way to prop the retail price....refinery " routine maintenance "....also known as routine fleecing of car-addicted Californians who need to burn more expensive " cleaner gas ". The West Coast premium is a massive con.

http://www.consumerwatchdog.org/node/13286

Mon, 05/28/2012 - 12:11 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Free market at work.  From your article:  "Several of them are fully or partly shut down, for repairs or“scheduled maintenance” or just because the owner thinks refining gasoline is temporarily not profitable enough. This restriction in the state’s gasoline supply can go on for as long as refineries wish–the state has no authority to demand that scheduled maintenance be more rationally planned or efficiently conducted, or to investigate whether a plant owner is playing games with our pocketbooks." 

Enron did the same shit.

Mon, 05/28/2012 - 12:20 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Wrong. Socialism at work.

Cut taxes on gas and you'll see a rising demand.

Which part of NO LONGER PROFITABLE TO THE PRODUCER (AND TO THE CONSUMER) do you not understand?

How about forcing you to operate at a loss for a change?

Mon, 05/28/2012 - 12:22 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

LOLzy... [clutching my stomach whilst clearing the tears from my eyes]

You sad sad sap.

Mon, 05/28/2012 - 14:18 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Are you implying that further raising taxes will get the world out of this global economic meldown?

You sad sad IRS employee.

Mon, 05/28/2012 - 12:28 | Link to Comment LetThemEatRand
LetThemEatRand's picture

What is your evidence that the refinery in CA was operating at a loss? 

And how about if the oil companies have to start paying for the wars that get them access to oil and that keep their pipelines safe?

Mon, 05/28/2012 - 12:49 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Mr. flying florist.

How about ending the peak oil hoax and letting clean technologies out of the closet?

That would put an end to your oil wars.

Did Ogolfer like his latest floral arrangement?

 

Mon, 05/28/2012 - 13:15 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

 

 

Ahmeexnal :

" How about ... letting clean technologies out of the closet? "

 

Realizing conspiracy theorists breathe the 'thinnest of air' to begin with, yours might have just became even more rarefied ..

 

 

Mon, 05/28/2012 - 13:35 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Doubt is the father of invention.

I'm a very doubtful entity.

Mon, 05/28/2012 - 14:40 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Wrong.  Necessity is.  If it becomes necessary for my survival to kill you and I have the means to do so, I will.

Read your history moron, same as it ever was.

Mon, 05/28/2012 - 20:29 | Link to Comment StychoKiller
StychoKiller's picture

Sigh, Necessity is the MOTHER of invention.

Mon, 05/28/2012 - 19:43 | Link to Comment Harbanger
Harbanger's picture

Doubt is a poor translation of the word dubbio.  In context a better translation is questioning or "to question".  Which is something people dared not do at the time of Galileo.  In a way, very similar to questioning the "experts" that are saving us now. 

Mon, 05/28/2012 - 12:09 | Link to Comment savagegoose
savagegoose's picture

so 52p  is what the refiner charges, and the rest is taxes. remebr this when next people want to slagg off at greedy petro companies.

Mon, 05/28/2012 - 12:35 | Link to Comment Matt
Matt's picture

How well maintained are the roads and bridges in the UK? Arguably, road taxes are not high enough in America, which is why the infrastructure is crumbling.

Although, if the taxes are being treated as general pool rather than to specifically finance infrastructure, it could just be misallocation.

Mon, 05/28/2012 - 13:34 | Link to Comment knightowl77
knightowl77's picture

It is serious misallocation....the fed and state taxes on gasoline go to many things other than roads and bridges

Mon, 05/28/2012 - 12:12 | Link to Comment Sandmann
Sandmann's picture

the last thing the UK needs as the BOE contemplates launching even more QE is an actual supply driven spike in gas prices to make the chaos complete

a fuel duty increase originally planned for 1 January 2012 deferred to 1 August 2012. George Osborne's announcement means this still stands, meaning fuel duty will increase by 3.02 pence per litre.
Mon, 05/28/2012 - 12:15 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Anyone remember when banks used to lend money to businesses like refineries?  This one had an asking price of $1B.  That's 1/5 (or less) what Jamie Dimon lost on the roulette table.  But I suppose investing in a refinery has too much downside risk.

Mon, 05/28/2012 - 12:18 | Link to Comment Flakmeister
Flakmeister's picture

Somewhat ironic that one of the symptoms of Peak Oil is the collapse of the Refining industry....

Here is the problem:

http://www.energyinst.org.uk/education/coryton/page6.htm

Do you see the breakdown of where the oil is sourced (figures are for 2000)? Refineries optimized for light sweet crude are doomed because the primary feedstock is declining (North Sea peaked in ~2000) resulting in an unsustainable crack spread... 

 

Mon, 05/28/2012 - 13:19 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

 

 

" Somewhat ironic that one of the symptoms of Peak Oil is the collapse of the Refining industry.... "

 

Gee, exemplification of 'peak oil' effects to a RATIONAL person one might expect 1) crude prices to skyrocket, 2)  refinery production to drop (due to the high cost/scarcity of feedstock) while 3) on the 'demand' side we would see shortages ...

 

Not NOoooooooo!

 

 

 

 

Mon, 05/28/2012 - 13:42 | Link to Comment Flakmeister
Flakmeister's picture

Why?  You clearly do not understand the nature of the Hubbert Curve...

What you describe will happen on the downslope and we are currently on the plateau, 7 years and counting....

And perhaps why don't you google up some recent newsstories about diesel and jet fuel shortages in Africa... (Let me guess, to a narcissist like yourself, shortages only exist if they affect you)

And you do realize that at the Peak, there is more oil being produced than at any other time in history? What is happening is the quality of the oil is changing while we sit on the plateau... to Coryton, there is huge difference between 1 million barrels of Bonnie Light from Nigeria and 1 million of Arab Heavy...

Finally, you do understand the the price of oil acts like a govenor on the economy? You cannot raise the price on end without demand destruction. Too much demand destruction and the price will drop.

Then again, given the facile reasoning and analysis you have demonstrated in your posts, I am hardly suprised that the sublties of peak oil escape your grasp.... 

Mon, 05/28/2012 - 13:48 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

 

 

 Flakmeister :

" Why? "

 

Because I am a rational person ..

 

(The inference being: you are not a rational person.)

 

 

Mon, 05/28/2012 - 14:06 | Link to Comment Flakmeister
Flakmeister's picture

Your analytic abilities would be considered unusually crude for a colony of Cherrystone clams.....

Mon, 05/28/2012 - 16:00 | Link to Comment falak pema
falak pema's picture

If you knew anything about the oil industry you would know two things : 

1° It is an Oligopoly, it controls the market, something it shares with OPEC since 1973, and it shares on uber-Oligarchy basis with the "good guys" there, thanks to Saudi connection.

2° It is vertically integrated. From 1979, the world knew we were in PEAK OIL . But it didn't suit the Reagan-Thatcher mantra so we told the Arabs to open the tap, big time,  and oil prices fell in 1983  onwards. But in the oil industry we KNEW it was an economic flashing of mirrors. So oil industry of FIRST world disinvested in refining where the margins disapeared, as oil prices were intrinsically high even though kept under the carpet by Saud, the multinationals invested heavily in the oil production area where the real future money was and cut back on refining investment in first world where the real return was low. Thirty years later those refineries are now outsourced tin pots of rust and all the Oligarchy money has either gone to second world refining or world wide oil R&d and production. Now its been neglected and asset stripped and milked for so long, by Investment trusts like Petroplus, its a dead end. Tuff on the consumer he gets double whammied. But the whole idea of Reaganomics and Thatcherism was to kill the welfare state and the over fat first world middle class; they've succeded beyond all their hopes...So the chickens now come home to roost; and the transnationals of course are only First world in name; they are truly global. The masks have come off for all to see. And Peak Oil which was covered up is now stark and staring us all in the face; like Medusa.

Don't forget the big money is made upstream; when it sells at 120 USD/bbl, Brent earns 80 USd/bbl gross margin ex production costs for majors and Opec Oligarchs to share. It gets transfer priced and lands in consumer countries at "market prices", the production rent having been paid to a trading company in Caymans. Simple if you're  vertically integrated. Its worked like this for 80 + years with the seven sisters; since 1928 exactly. The majors pay 8% corporate tax world wide on their profits. Just for Gabon that produces since 1972 220 000 BBL/D this generates gross margin of 200 billion USD over 35 years, (aka 12 million tons per year @ 500 USD/Ton gross margin). BTW these margins have stayed constant and equivalent to current price of 80USD/bbl today. Exactly zilch got invested or returned to the PEOPLE of Gabon. It was ALL skimmed off for "investment" abroad. Now you multiply that for Africa alone to take into account for : Nigeria, GAbon, Congo, Angola, Libya, Algeria and Egypt, by 30. Then you know the size of true RIP OFF that the Oil majors and their surrogate politicians have committed since 1975....Awesome financial and economic genocide...

Mon, 05/28/2012 - 12:18 | Link to Comment Dull Which
Dull Which's picture

I propose calling it The Coryton Bank and letting the "markets" do their thing

Mon, 05/28/2012 - 12:20 | Link to Comment Stackers
Stackers's picture

Love the cost break down. 54p in cost in and profit and and 80p in taxes (150%tax), But they love their "free" health care.

Mon, 05/28/2012 - 12:33 | Link to Comment tonyw
tonyw's picture

In most of Europe the health care is around 7% of GDP about half of the US.

According to the UN the US spends more than anywhere else and ranks 37th in quality.

Obviously services have a cost so it's how you want to pay for it and even whether your government spends no more than it receives in taxes or has to borrow to cover the gap - but that must end one day.

 

Mon, 05/28/2012 - 12:21 | Link to Comment RobotTrader
RobotTrader's picture

Anybody here live in Greenville, South Carolina?

Only 2 cents away from $2.99/gal.

http://www.greenvillegasprices.com/

The consumers there must be ebullient.

Peak Oil turned out to be another Wall St. scam.

 

Mon, 05/28/2012 - 12:30 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Close to the gulf source and several refineries.  Precisely why one of our largest operations is in South Carolina, cheap diesel.

 

Right, there are no hard limits in a finite world.

Welcome back captain hindsight.  LMFAO!

Mon, 05/28/2012 - 12:53 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Riiiiiiight. Finite and flat world with no other energy alternative but to burn fossilized dinosaur turds, right?

 

Mon, 05/28/2012 - 13:10 | Link to Comment Hulk
Hulk's picture

Hey Jesus, you find an alternative with the  energy density, portability and scalability of Oil, and I'll become a follower...

Until then, alternative just gets us quicker to the poorhouse...

Mon, 05/28/2012 - 13:18 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Correct.  The capital and energy mis-allocation and mal-investment continues.  Welcome to the post-growth world.

Long sharecropping!!

Mon, 05/28/2012 - 13:24 | Link to Comment Hulk
Hulk's picture

Long pasture farming and long greenbeans !!!  

Mon, 05/28/2012 - 15:34 | Link to Comment tmosley
Mon, 05/28/2012 - 19:11 | Link to Comment Harbanger
Harbanger's picture

He SAID "you find an alternative with the  energy density, portability and scalability of Oil,)

Zinc Air batteries is your answer?  Brilliant.  And to think they could've used them on the Chevy Volt.   I have a few Duracell 9v Zinc Air batteries (procell) and they do last a bit longer then regular copper tops.

Mon, 05/28/2012 - 21:48 | Link to Comment El Tuco
El Tuco's picture

CNG/LNG, not as good as diesel but Waste Managment is converting their entire fleet over. Seems there is over 100 million in savings a year for them when running natural gas. I figure long haulers will be runnning dual systems soon (diesel/NatGas) in an attempt to bring down costs.

 

 

 

Mon, 05/28/2012 - 13:13 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Unfortunately it is a bit more complicated moron.  There are hard laws and hard limits, period.  Sure there are other technologies, but it is all about flux.  In particular, the flux of energy required to maintain a certain quality of life.

Moreover, there is in fact a set level of energy being showered on the earth at all times from the sun.  There is also energy trapped in numerous elements if you know how to release it (using fusion or fission).  However, the latter requires an initial energetic investment up front and the process is NOT clean - there is waste that must be dealt with.

Crawl back under your rock.  There are real experts working on it, the laws of thermodynmaics are real, deal with it.  My brother has been in the oil and gas industry for 20+ years, my uncle (now retired) was for over 40+ years.  

Wake the fuck up.  Look at the amount of energy that has to be invested in order to recover a barrel's worth of energy.

We will stop using oil with millions of barrels in the ground simply because it will become too expensive from an energetic point of view (this is all that matters - you won't be able to "PRINT" enough capital to make it profitable )

There is no "clean technology" that can deliver the current flux to maintain the current quality of life, period.  Also, the distillates are used for numerous other things that enhance our quality of life.

This is precisely why , Exxon, Cheveron, BP, andf all the largest energy providers are working feverishly on things like oil production from algae (that can be grown in the open ocean and deserts) that won't compete with agricultural land use and food.  Of course there is still the issue of the energy required to keep the biological element cycles going (nitrogen cycle, sulfur cycle, phosphorus cycle - etc), but that is another, rather complex story.  God, you have some of the stupidest, most paranoid posts I have ever read.  perhaps there is a ZH award for that.  Go educate yourself by working in the industry for a change instead of blogging from your parent's basement.  You might actually learn something.


Mon, 05/28/2012 - 13:28 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Ahhh...there you have it.  Your posts are standard flowchart globalist paid troll operating handbook procedure.

Another  selfproclaimed idiot with a Ph.D. who lights candles at the altar of the Laws of Thermodynamics.

You are no different than Benji Bukakke who light his candles at the altar of the Laws of Keynesian Economics.

Your laws of physics are flawed.  As in economics, the current school of thought in the hard sciences is about to collapse, since as you have clearly stated, present day science is nothing more than a puppet of "the industry" for whom you work.  You think what your masters want you to think. Wait, I take that back.  They do not pay you to think. Sad pathetic self glorified phuk.

The notion that all these fragments is separately existent is evidently an illusion, and this illusion cannot do other than lead to endless conflict and confusion. Indeed, the attempt to live according to the notion that the fragments are really separate is, in essence, what has led to the growing series of extremely urgent crises that is confronting us today. Thus, as is now well known, this way of life has brought about pollution, destruction of the balance of nature, over-population, world-wide economic and political disorder and the creation of an overall environment that is neither physically nor mentally healthy for most of the people who live in it. Individually there has developed a widespread feeling of helplessness and despair, in the face of what seems to be an overwhelming mass of disparate social forces, going beyond the control and even the comprehension of the human beings who are caught up in it.

David Bohm

Mon, 05/28/2012 - 13:28 | Link to Comment Hulk
Hulk's picture

You are in for one hell of a rude awakening...

Mon, 05/28/2012 - 13:32 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Green irate pal. I went through that 12 years ago.

Questioning status quo "science" today is very much like trying to stand up to the inquisition back in the day.

The only thing I can say to you is: POST TENEBRAS LUX.

Mon, 05/28/2012 - 13:44 | Link to Comment Flakmeister
Flakmeister's picture

Look up the term Boetian and get back to us....

Mon, 05/28/2012 - 13:52 | Link to Comment Ahmeexnal
Ahmeexnal's picture

There's a picture of you illustrating that term.

I suggest you diversify your diet. Pork really is bad.

Mon, 05/28/2012 - 13:48 | Link to Comment Hulk
Hulk's picture

The physics behing energy useage is well developed and can be done with simple math

Our only "hope" at this critical juncture:

https://lasers.llnl.gov/

But this will take much time...

Mon, 05/28/2012 - 14:13 | Link to Comment Hulk
Hulk's picture

Over the past 10 years, there has been an exponential increase in the number of wells in order to keep production flat.

That should scare the hell out of everyone...

Mon, 05/28/2012 - 13:27 | Link to Comment kurt
kurt's picture

Shill?

Mon, 05/28/2012 - 13:56 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Yep, brother and uncle paid shills for decades. What else could he say but support the paymasters line: "only bigoil experts can do this".

He only left out the last line in the bigoil shill handbook:

Please donate to the continuous effort of Exxon, Chevron, BP, and all the largest energy providers.

Hey LoP, had Enron had trolls like you back in the day, they would still be alive and kicking.

Mon, 05/28/2012 - 13:59 | Link to Comment LawsofPhysics
LawsofPhysics's picture

There are real experts that actually work in these fields and deliver that real product.

What have your contributions been...  

Yeah I thought so.  How are things in mom's basement again?  Your responses are laughbale and I will see your posts for what they are from now on, a joke.  Thanks for clearing that up.  Sounds like you need to get a job.

Mon, 05/28/2012 - 14:08 | Link to Comment Ahmeexnal
Ahmeexnal's picture

The joke is on you, bubba.

The one who'll be looking for a job when your energy=oil bubble goes the way of the dodo will be the fat bald guy who stares back at you in the mirror each and every morning.

Bigoil shills will join the foodstamp line along with bankers and politicians.

Your expertise with dealing with "organic gooey matter emanating from a hole" and the "laws of thermodynamics" will come in handy when you scrub toilets at the greyhound bus terminal.

Mon, 05/28/2012 - 14:12 | Link to Comment LawsofPhysics
LawsofPhysics's picture

LMFAO!!!  Strike a nerve?  Thanks for giving yourself away as the unemployed idiot that your are.  Guys like me will be looking for sharecroppers soon so you may be in luck.  

LMFAO!!!

Mon, 05/28/2012 - 14:24 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Sorry to dissapoint you.

It seems you are irate that you outed yourself as a bigoil shill and therefore an Ogolfer campaign contributor.

Peak Oil tax. Carbon tax.

What's next? Oh, yes, the Anti dog eat dog law.

 

Mon, 05/28/2012 - 14:43 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Where do I "out" anything?  I can't stand Obama or Rhomney.  Wake the fuck up and look at who is funding BOTH of them.  It is the same financial fucks.  Man, how stupid are you?

Mon, 05/28/2012 - 14:01 | Link to Comment LawsofPhysics
LawsofPhysics's picture

No, just facts.  Most sheeple do have a problem with such things.  The question is, what are you?

Mon, 05/28/2012 - 13:29 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

 

 

LawsofPhysics :

" Unfortunately it is a bit more complicated moron. There are hard laws and hard limits, period. Sure there are other technologies, but it is all about ...

...

This is precisely why , Exxon, Cheveron, BP, andf all the largest energy providers are working feverishly on things like oil production from algae "

 

'scuse me while I cry: BULLSHIT !

 

This does not rise to the level of "feverish":

 

http://www.exxonmobil.com/Corporate/energy_vehicle_algae.aspx

"Under the program, if research and development milestones are successfully met, ExxonMobil expects to spend more than $600 million, which includes $300 million in internal costs and potentially more than $300 million to SGI."

 

Exxon reports $9.4 billion profit - Jan. 31, 2012 - http://money.cnn.com/2012/01/31/markets/exxon/index.htm

Exxon Makes $104 Million In Profit Per Day So Far In 2012 -http://thinkprogress.org/climate/2012/04/26/471469/exxon-takes-104-milli...

 

Yeah - FEVERISH - about 3 days profit for internal costs plus 3 more days profits to SGI.

 

That is not 'feverish'.

 

Mon, 05/28/2012 - 13:55 | Link to Comment LawsofPhysics
LawsofPhysics's picture

And how much have other companies spent?  Yeah, I thought so.

Mon, 05/28/2012 - 14:01 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

 

 

LawsofPhysics :

" And how much have other companies spent? Yeah, I thought so. "

 

Hey! This was your argument, your assertion, not mine ...

 

Mon, 05/28/2012 - 14:04 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Wrong.  My point was that among private companies these companies are making large investments.  That is a fact.  Funny how the same people who don't like this fact also have a problem with governments spending on renewables.  Can't have it both ways folks.  If noone makes the investment of capital and resources, the technologies will never be developed.  Loser hypocites who need to go work in the real world and get the hell out of their parents basement.

Mon, 05/28/2012 - 14:13 | Link to Comment Ahmeexnal
Ahmeexnal's picture

How abourt having your "EXPERTS" clean up the gulf coast oilspill?

"Yeah, I thought so."

Once again, your BP/Shell/Exxon masters DO NOT PAY YOU TO THINK.

Mon, 05/28/2012 - 14:14 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Why not get off your ass, I think they are still hiring people to do that.

Chance favors the prepared mind.  If you don't THINK CRITICALLY, then you will end up unemployed, oh wait, nevermind.

Mon, 05/28/2012 - 14:31 | Link to Comment Ahmeexnal
Ahmeexnal's picture

RIIIIIIIIIIIIGHT.

You are SOOOOOOOOO critical of current "science" and of current energy sources.

Those who are critical have their project funds cut.

HAHAHAHAHA

YOU SAD PIECE OF>>>>>

Get a life pal!

Wait, why don't you get another Ph.D. instead. Make that a six pack of cold, bigoil sponsored Ph.D.'s

Won't waste my time arguing with a bigoil shill with an IQ in the double digits.

Keep brown nosing your big oil bosses buddy, it won't last long!

Mon, 05/28/2012 - 14:35 | Link to Comment LawsofPhysics
LawsofPhysics's picture

So you don't want alternatives to be developed?  Contradict yourself much?

Mon, 05/28/2012 - 14:38 | Link to Comment Ahmeexnal
Ahmeexnal's picture

They already have you stupid moron.

Mon, 05/28/2012 - 17:50 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Wow, how "insightful"  LMFAO!  Stop avoiding the question, do you or don't you want these companies to make these investment in green technologies?  I for one would rather they do it with their profits and not my tax dollars.  But then again you may simply be another hypocrite moron.  Answer the fucking question and clarify your position.  My guess is you won't, but simply throw back more insults.  Moreover, if this technologies already have been fully developed and are profitable (as you say), where are they?  FAIL.

Mon, 05/28/2012 - 12:37 | Link to Comment Matt
Matt's picture

Or it could be that demand is falling faster than supply, since we are in a Depression.

Nah, it has to be unlimited oil and infinite growth.

Mon, 05/28/2012 - 14:06 | Link to Comment SAME AS IT EVER WAS
SAME AS IT EVER WAS's picture

Scam alright! Its amazing what tptb can do when they want to, especially with the elections fastly approaching. 

Mon, 05/28/2012 - 16:40 | Link to Comment blunderdog
blunderdog's picture

That doesn't make much sense. 

Those guys in Greenville with super-cheap gas should be SKYING the S&P right now....what could be wrong?

Mon, 05/28/2012 - 12:28 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Long bikes.  Bullish for bike companies.

Mon, 05/28/2012 - 13:02 | Link to Comment Jack Sheet
Jack Sheet's picture

That diesel price in GBP is the same as the EUR price on the continent (GBP/EUR currently 1.25 which is in itself inexplicable)

Mon, 05/28/2012 - 13:49 | Link to Comment css1971
css1971's picture

Everything in the UK is more expensive.

Mon, 05/28/2012 - 13:54 | Link to Comment Joebloinvestor
Joebloinvestor's picture

I bet the UK government would be more open to the Keystone pipeline being routed to their island then the US govt is in having it routed to the US.

Mon, 05/28/2012 - 14:01 | Link to Comment SAME AS IT EVER WAS
SAME AS IT EVER WAS's picture

Sounds like this is a job for the ceo of chk, followed up with a guest appearence from carl i-con. 

Mon, 05/28/2012 - 14:23 | Link to Comment Flakmeister
Flakmeister's picture

Came across this post by Bernard J. elsewhere.... thought it fit in well here.

Growth based on increased technological sophisication could be sustainable.

In a manner of speaking it could, but only within the contraints of energy and resource requirements. It’s analogous to the increase in biodiversity that occurs over evolutionary scales as species specialise to maximise their capacities to inhabit particular niches. Or if one prefers to be crude, it’s a process of salami slicing.

Such a maximal development of complexity most efficiently comes about with competition, which would delight the free-marketeers, until one points out two things – it requires true freedom (not the faux freedom, preferred by many business interests, to fiddle things so that only their chums get a bite at the apple), and it requires a suspension of some of the characteristics of ‘civilisation’ that differentiates us from the ‘beasts’ that too many humans disparage. Oo, and it also requires no more than minor perturbations of the ecosystem (or the econosystem) in which the biodiversity (technodiversity) occurs. Big upsets reset…

But I digress. The laws of thermodynamics dictate that complexity (? information density) would approach an asymptote* based on the amount of free work that can be wrought from a system. This progress toward an asymptote is the “increase” in technological sophistication. The asymptote isn’t necessarily a peak of possible technological sophistication (although there is likely a correlation), but it is largely analogous to the area under the overall curve that describes a society’s overall technological base. The ultimate height of technological achievement can be raised to some extent, but at the cost of sacrificing broad technological application elsewhere – just as we can’t all be kings, we can’t all have our own teleporters, especially if some want to have their own worm-holes as well.

Another way to imagine it is if our complete energy/materials/innovation resource base was a big lump of modelling clay. We can share lumps out to members of a group for them to model as they will, and some could perhaps model exquisitely refined and complicated works of art with their share – and larger ones if they co-opt more from others – but the total potential of sculpting mass is directly dictated by the size of the original lump. Of course, one can always take a sculpture and rework it into something new, but this isn’t ‘growth’, it isn’t ‘development’, it’s redevelopment, it’s recycling, it’s reprocessing, it’s all those other “re” words that describe an equilibrium system. “Regrowth”? Yeah, that’d fit too, but whatever it is it isn’t the process of exponential growth and perpetual borrowing from others in space and time that characterises the current (flawed) Western economic paradigm.

It might seem somewhat pedantic, but in describing system-wide processes it’s important to ensure that one never loses sight of the thermodynamics that underpin the universe – the real and true Science of Doom. I apologise to Tamino if this post has strayed too far from topic but I believe that without moving toward an understanding of the fundamental limits of resource use, humans will not be equipped to make the best decisions about how to deal with the impending problems of system damage that we are currently gleefully inflicting on our little blue marble.

[*Many people insist that human technological development is unbounded and exponential, or at least linear. I would argue that whilst the laws of thermodynamics operate, such development is ultimately likely to follow a sigmoid style trajectory, and that the illusion of unboundeness is simply a reflection that the point of inflection has not yet been recognised. But not having yet bumped into it doesn't mean that the inflection point, and the related asymptote, are not there.]

Mon, 05/28/2012 - 14:39 | Link to Comment LawsofPhysics
LawsofPhysics's picture

If only so much capital and resources were not being mis-allocated and mal-invested.  I have no doubts that Nature will fix it all.  Hedge accordingly.

Mon, 05/28/2012 - 14:43 | Link to Comment Bobbyrib
Bobbyrib's picture

It's obvious that any increase in the price of gasoline was caused by currency debasement! /sarcasm.

Mon, 05/28/2012 - 15:07 | Link to Comment JohnFrodo
JohnFrodo's picture

If they were really serious it would have been a sodomy charge

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