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 - 12:07 | 2469408 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 | 2469424 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 | 2469450 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 | 2469458 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 | 2469770 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 | 2469474 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 | 2469537 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 | 2469598 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 | 2469647 Ahmeexnal
Ahmeexnal's picture

Doubt is the father of invention.

I'm a very doubtful entity.

Mon, 05/28/2012 - 14:40 | 2469829 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 | 2470451 StychoKiller
StychoKiller's picture

Sigh, Necessity is the MOTHER of invention.

Mon, 05/28/2012 - 19:43 | 2470370 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 | 2469415 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 | 2469499 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 | 2469648 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 | 2469429 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 | 2469436 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 | 2469445 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 | 2469612 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 | 2469679 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 | 2469693 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 | 2469733 Flakmeister
Flakmeister's picture

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

Mon, 05/28/2012 - 16:00 | 2469943 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 | 2469446 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 | 2469453 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 | 2469494 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 | 2469456 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 | 2469481 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 | 2469554 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 | 2469587 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 | 2469609 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 | 2469621 Hulk
Hulk's picture

Long pasture farming and long greenbeans !!!  

Mon, 05/28/2012 - 15:34 | 2469960 tmosley
Mon, 05/28/2012 - 19:11 | 2470303 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 | 2470563 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 | 2469593 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 | 2469618 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 | 2469629 Hulk
Hulk's picture

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

Mon, 05/28/2012 - 13:32 | 2469641 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 | 2469686 Flakmeister
Flakmeister's picture

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

Mon, 05/28/2012 - 13:52 | 2469699 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 | 2469692 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 | 2469753 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 | 2469625 kurt
kurt's picture

Shill?

Mon, 05/28/2012 - 13:56 | 2469633 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 | 2469714 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 | 2469730 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 | 2469748 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 | 2469785 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 | 2469839 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?

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