Friday, February 27, 2009

Relying on Reliance – Rather than Relying on Ourselves

Relying on Reliance – Rather than Relying on Ourselves



Reliance Industries Ltd. an Indian company is preparing to startup its second huge refinery in Jamnagar in Western India. Reliance is already operating a 660,000 barrel per day (bpd) refinery there that together with the new 580,000 bpd unit creates the world’s largest refining complex, a 1.24 million barrel per day monster that is going to have a major effect on refined fuel prices around the world.


The new unit has been built strictly for exporting finished product, primarily gasoline, diesel and Jet A. This unit has been built specifically to produce fuel for the US market. It can meet all of the current and proposed fuel standards that the EPA has created.
Reliance has leased 935,000 barrels of storage space at Hess’s Port Reading terminal and has opened a trading office in Houston.


They will very quickly become a major force in the US marketplace. While in the short term this will likely drive prices at the pump down, the long term effect while be negative.
Over the last few years we have heard time and time again how much the major oil companies have been earning in profits, billions every quarter. However they have invested precious little of this windfall in infrastructure here or abroad.


The US cannot refine all the fuel we use, so others are doing it for us. In every way this is a bad idea and we will suffer for it later. The irresponsibility of not investing in refinery capacity, storage, pipelines, and other required projects is leading us into a mess our children and grandchildren will suffer for.


In eastern Canada, Irving Oil is making a 300,000 bpd expansion to its Saint John’s New Brunswick refinery to provide finished product for the northeastern US markets and now India will add 580,000 bpd to this amount. Again while this may temporarily lower pump prices, it is a strategic mistake to outsource the refining of our fuels.


We are sending more money overseas for no other reason than it is easier than dealing with our problems here.


Another part of the problem is the whole NIMBY (Not In My Back Yard) theory. We don’t build refineries because we don’t want to see or smell them.


Well it is time that we grow up, and either put new refineries where they won’t bother anyone or we need to figure out how to clean them up enough that we can live with them.


It is not bad enough that we have to import 2/3’s of our crude oil to support our addiction, and then we import another 10% of our total usage in the form of finished product. Apparently we don’t even want to make the money and have the jobs that we should get from refining it.


The idea that we in the US have so much money that we can afford to simply let someone else deal with our problems while sending them boatloads of money is shortsighted and frankly, stupid!

For more on this and other fuel related subjects go to: http://www.lcbamarketing.com and click on Fuel School Articles

Diesel Doctor


Copyright 2009© - William Richards

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