Experts predict pump prices will spike by as much as 50 cents a gallon later this year, as refiners and gas stations switch from winter- to summer-blended fuels. Speaking to AP [via the Pittsburg Post Gazette], analysts blame an alkylate shortage. This little-known and expensive gasoline additive replaced MTBE two years ago, when regulators found the potentially cancer-causing additive seeping into ground water. The oil companies deny they’re limiting production of alkylate. Valero Energy GM John Pickering says their Paulsboro refinery in New Jersey makes enough alkylate to meet its needs, but concedes that there is a national shortage of the additive in the spring and summer. Other refiners say they’re reluctant “for competitive reasons” to reveal how they blend gasoline, or whether they face alkylate shortages. Little wonder Hawaii passed a law (yet to be enforced) requiring local oil refineries to reveal their pricing practices.
17 Comments on “Alkylate Shortage May Push-Up Gas Prices by .50 a Gallon...”
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Yes, the oil companies are creating the shortage. They have created a “hurricane Katrina” type fear campaign for the last three years. Instead of blaming these prices on a shortage of something, why not just blame it on what the problem REALLY is…MASSIVE GREED.
Has ANYONE had to wait in a gas line in the past three years of this outrageous price inflation scheme? No. We all know that it’s all contrived in the Ivory Towers of the oil companies. They have the whole world by the balls and, of course, they know it. IS THERE NOTHING THAT CAN BE DONE TO BRING THESE BASTARDS DOWN, or do we just wait for them to price themselves into a point where Bill Gates is the only person who can afford to buy gasoline?
Greedy BASTARDS.
I take it you’re not a fan of imposing higher taxes on gasoline, are you?
Just slam ethanol, the only little competition the oil companies have, at every chance possible. Sarcasm off. Expect $4.00 gasoline by the end of May.
OK.
Ethanol sucks. It reduces mileage and power, doesn’t reduce greenhouse gases, wastes water, and is leading to food price inflation.
You’re welcome.
Exxon Mobile yesterday reported profits of $40.6 billion for last year. You don’t make that kind of money being kind to the consumer. And Chevron reported the most profitable year in their history (and they’ve had profitable ones).
Hey, let’s boycott all of the bastards! (UH, yea… haven’t heard that B4).
Hey, here is an idea. Let’s get in on the easy cash. BUY THE STOCK. The more they stick it to the consumer, the more we will make! When everyone is whining, we will be laughing! Muhahahaha.
Oh wait. They really don’t make that much money because they are so capital intensive. Their profit has historically been pitifully low across the industry. They only make billions because they invested HUNDREDS of billions. They produce a product that everyone needs and somehow keep making it cheaper by volume than ANY OTHER LIQUID WE BUY except municipal water. They do all this year after year while people call them all sorts of names. Their workers risk, and sometimes lose, life and limb.
Really, let’s try to aim a little better with the insults and name calling. Otherwise, drill for your own oil, refine it yourself, and THEN you can bitch about the oil companies.
I’m using less gasoline due to the high price.
If you don’t want to spend as much on gasoline, buy a more efficient car. A drop of 5% in gasoline demand would cause prices to plumment.
Since our government is limiting supply of gasoline through their environmental and energy policies, prices will keep going up until demand drops.
Ironically enough many commentators on this site go ga-ga over cars we can’t/won’t get that the Europeans can. Just think of it as creeping closer to European style gas prices. ;)
Most US refineries are older than the posters here. I’m surprised this kind of thing doesn’t happen more often. Oil companies may have huge profits, but when compared against other industries, the rate of return is not really all that great. The spread between oil prices and gasoline prices is usually under 20 cents a gallon, when you add in operating expenses, most refineries are making maybe 5-8 cents a gallon on a good day. When you consider the fact that these things cost billions of dollars to build, its easy to see why no new ones have sprouted up.
Since the oil companies’ record profits have only been in the past few years of high gas prices, could one assume that they’ve been close to losing money in the recent past?
uhhmn, silly me, I THOUGHT the 10% ethanol in the gas I buy was to replace the MBTE. OK, so what does the ethanol do beside make ADM more money?
Andy D :
February 3rd, 2008 at 11:00 am
uhhmn, silly me, I THOUGHT the 10% ethanol in the gas I buy was to replace the MBTE. OK, so what does the ethanol do beside make ADM more money?
Seems to me I was told that as well. As far as the question, have oil companies ever lost money, that depends on what you mean by lost. After paying all bills including debt service, I wouldn’t be surprised to hear they had lost money during at least a few years in the 80’s. As another poster pointed out, the return on investment is low for oil refineries, very low. The big profits are being made by the oil rich nations that provide the crude oil. Their oil production costs are very low, and their profit is a huge percentage of the initial capital outlay (next to nothing).
As for close to losing money, no, but they were not quite raking it in either. Oil companies are being run less and less by petro engineers and geologists, and more and more by MBA’s and Accountants. A dozen years ago, there was a definite boom and bust cycle (the oil guys are all about producing oil and would spend all sorts of money doing it), but now they invest as if they are in a constant bust. (Damn money men, if you are looking for a conspiracy on oil prices it is likely happening on Wall Street rather than in Texas. The oil guys used to reinvest everything and more when the price of oil went up, which always drove it right back down.)
Also, when oil is low, they all stop bidding up government leases. That is why Clinton had to offer leases without royalties to get them to bid and drill back in the nineties. Of course, the US government and it’s people reneged on the deal and there is now a fight to get the royalties paid. Yes, we ARE acting like a banana republic. That happens when less than half the voting public actually supports the government with tax dollars.
As for alkalyte vs. ethanol. Both are oxygenates. I do not know specifics why or when one is used rather than the other, but I do know that transportation issues make it hard to use ethanol at all refineries. I will have to ask around to get to the bottom of that one.
Alkylate is used by pretty much all refineries. Its made by basically putting two butanes together. You need to blend it into other components to raise the octane and reduce the vapor pressure of gasoline. Almost all gasoline contains some alkylate, even the stuff with ethanol in it.
Oil is the only business where cutthroat competition drives prices up.
Gardiner,
Huh? How does that work?