Comments on: Capitalist Reform to Reduce International Oil Demand: Getting World Refiners to Price at Market http://www.masterresource.org/2009/04/capitalist-reform-to-reduce-oil-demand-and-related-emissions-getting-world-refiners-to-market-pricing-like-us-refiners/ A free-market energy blog Sat, 11 Feb 2012 20:41:38 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Donald Hertzmark http://www.masterresource.org/2009/04/capitalist-reform-to-reduce-oil-demand-and-related-emissions-getting-world-refiners-to-market-pricing-like-us-refiners/comment-page-1/#comment-1025 Donald Hertzmark Fri, 24 Apr 2009 13:41:12 +0000 http://masterresource.org/?p=1997#comment-1025 Dear E.M., Virtually all of the savings lie outside the US. We are able to take up only a tiny fraction of the world's HFO to use as a feedstock. The rest has to be used as a fuel. If that HFO now used around the world as a fuel were refined to lighter cuts as in the US system, then there would be little or no net HFO output, diesel and mogas demand could be met without using excessive distillation capacity and net demand for crude input to stills would fall. Those of us old enough to remember can recall that bad government policy in the US (The Entitlements Program of the 1970s) encouraged the construction of small, simple refineries. The ending of that program and the subsequent winnowing of the US refining industry led to the more efficient high tech refineries that dominate domestic refining. Such a process or "creative destruction" was not allowed in Europe or most anywhere else, resulting in the excess capacity of low conversion refineries outside this country. The numbers speak for themselves - in the latest week (Oil and Gas Journal, 13 April), crude inputs of 14.2 million bbl. yielded 13.9 million bbl of non-HFO products, and most of the HFO was used subsequently as feedstock not fuel. No other national refining system in the world is even close to numbers like that. Dear E.M.,
Virtually all of the savings lie outside the US. We are able to take up only a tiny fraction of the world’s HFO to use as a feedstock. The rest has to be used as a fuel. If that HFO now used around the world as a fuel were refined to lighter cuts as in the US system, then there would be little or no net HFO output, diesel and mogas demand could be met without using excessive distillation capacity and net demand for crude input to stills would fall.

Those of us old enough to remember can recall that bad government policy in the US (The Entitlements Program of the 1970s) encouraged the construction of small, simple refineries. The ending of that program and the subsequent winnowing of the US refining industry led to the more efficient high tech refineries that dominate domestic refining. Such a process or “creative destruction” was not allowed in Europe or most anywhere else, resulting in the excess capacity of low conversion refineries outside this country.

The numbers speak for themselves – in the latest week (Oil and Gas Journal, 13 April), crude inputs of 14.2 million bbl. yielded 13.9 million bbl of non-HFO products, and most of the HFO was used subsequently as feedstock not fuel. No other national refining system in the world is even close to numbers like that.

]]> By: E.M.Smith http://www.masterresource.org/2009/04/capitalist-reform-to-reduce-oil-demand-and-related-emissions-getting-world-refiners-to-market-pricing-like-us-refiners/comment-page-1/#comment-1023 E.M.Smith Fri, 24 Apr 2009 06:13:18 +0000 http://masterresource.org/?p=1997#comment-1023 I didn't see where the article shows that the simple refineries are destroying oil that US refineries do not; the article seems to say that they boil off the easy cuts, then send the HFO to the better refineries. This does not seem to be to be 'waste' available to improved efficiency. The redirection of HFO from electric generation to Diesel would create more, but that is a different question than actual loss of oil from poor refining processes. Is there really 15% burned up in the poor refineries that's available for recovery? Or is it efficiently refined, but as HFO, and used as generator fuel? BTW, these folks make a multifuel engine. Perhaps this kind of engine could break the notion that Diesel and Kerosene are good (industrial) and Gasoline is bad (public consumption) and help end the subsidy process... http://www.flexdi.com/flexdi-solution-multi-fuel.asp It would be hard to justify subsidy for one fuel over another if either can run the cars... Did I miss something? I didn’t see where the article shows that the simple refineries are destroying oil that US refineries do not; the article seems to say that they boil off the easy cuts, then send the HFO to the better refineries. This does not seem to be to be ‘waste’ available to improved efficiency.

The redirection of HFO from electric generation to Diesel would create more, but that is a different question than actual loss of oil from poor refining processes. Is there really 15% burned up in the poor refineries that’s available for recovery? Or is it efficiently refined, but as HFO, and used as generator fuel?

BTW, these folks make a multifuel engine. Perhaps this kind of engine could break the notion that Diesel and Kerosene are good (industrial) and Gasoline is bad (public consumption) and help end the subsidy process…

http://www.flexdi.com/flexdi-solution-multi-fuel.asp

It would be hard to justify subsidy for one fuel over another if either can run the cars…

Did I miss something?

]]> By: Bill Gathright http://www.masterresource.org/2009/04/capitalist-reform-to-reduce-oil-demand-and-related-emissions-getting-world-refiners-to-market-pricing-like-us-refiners/comment-page-1/#comment-1024 Bill Gathright Thu, 23 Apr 2009 12:13:55 +0000 http://masterresource.org/?p=1997#comment-1024 Governmental intervention into the markets is again at the center of this problem. Subsidies and price controls lead to these market distortions. Governmental intervention into the markets is again at the center of this problem. Subsidies and price controls lead to these market distortions.

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