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Re: Airlines and Railways - deep trouble? Reality check
Author: Rich Hunn
Date: 06-12-2008 - 18:23
Shell didn't close their refinery in Bakersfield, it was sold to Flying J because it made more
sense to sell it rather than revamp it for California fuels (it's a diesel facility but would
have taken mucho bucks for the new diesel formulations). You talk about drilling, there hasn't
been a new hole offshore in California for years. Most of the rigs still pumping have gone through
workovers and I don't think right now California would issue a permit for new drilling even on
private land. There's plenty of new permits in Colorado, New Mexico, the Dakotas and even Kansas
but the refinery capacity just isn't there. To say that the oil companies want contrived shortages
is a little misleading at best and an outright lie at worst. It's just a whole lot cheaper right
now to maximize capacity rather than build because the permitting process is so ridiculously
expensive. The Yuma refinery you mention has nearly $50 million invested and as you say it hasn't
been started yet though construction was supposed to start this summer. Say what you want about the oil companies but just like the railroads they report to a Board of Directors whose direct
responsibility is to maximize return to the stockholders.
sense to sell it rather than revamp it for California fuels (it's a diesel facility but would
have taken mucho bucks for the new diesel formulations). You talk about drilling, there hasn't
been a new hole offshore in California for years. Most of the rigs still pumping have gone through
workovers and I don't think right now California would issue a permit for new drilling even on
private land. There's plenty of new permits in Colorado, New Mexico, the Dakotas and even Kansas
but the refinery capacity just isn't there. To say that the oil companies want contrived shortages
is a little misleading at best and an outright lie at worst. It's just a whole lot cheaper right
now to maximize capacity rather than build because the permitting process is so ridiculously
expensive. The Yuma refinery you mention has nearly $50 million invested and as you say it hasn't
been started yet though construction was supposed to start this summer. Say what you want about the oil companies but just like the railroads they report to a Board of Directors whose direct
responsibility is to maximize return to the stockholders.
