Refining capacity limits
Just a quick blog, hopefully.
I was thinking about the argument that the current bottle-neck in gasoline production is refining capacity rather than oil extraction capacity.
The argument is muddied by different quality levels of oil as well. The supplies of "light sweet crude" may not be much above the refining capacity, while "heavy sour crude" may have much easier production increase possible, IF there was capacity to refine it (which takes modifications to existing refineries that process the sweet crude).
From the point of view that world production of light-sweet crude has now either peaked or is damn close to peaking suggests expanding capacity for this nicest crude is not very useful.
I don't know what's needed to refine heavier crude, and perhaps it is just about "adding new stages" to the process, or perhaps new refineries need to be designed and built to process the new heavier crude.
So I accept some changes are needed to refineries, but equally I'm thinking that it is not necessarily a bad thing to limit refinery capacity based on the idea that we'd like to transition away from oil (somehow!) If you build wider highways, you get more traffic. If you build more refineries, you'll get more oil consumption. If we had a national plan to halt increase oil consumption, then we should work that plan into evaluating refinery capacity.
On the other hand, of course limiting capacity means arificial scarcity and higher prices. Producers and refiners benefit from this. A better approach is to reduce demand and let refiners make their own decisions based on our goals in consumption.
I was thinking about the argument that the current bottle-neck in gasoline production is refining capacity rather than oil extraction capacity.
The argument is muddied by different quality levels of oil as well. The supplies of "light sweet crude" may not be much above the refining capacity, while "heavy sour crude" may have much easier production increase possible, IF there was capacity to refine it (which takes modifications to existing refineries that process the sweet crude).
From the point of view that world production of light-sweet crude has now either peaked or is damn close to peaking suggests expanding capacity for this nicest crude is not very useful.
I don't know what's needed to refine heavier crude, and perhaps it is just about "adding new stages" to the process, or perhaps new refineries need to be designed and built to process the new heavier crude.
So I accept some changes are needed to refineries, but equally I'm thinking that it is not necessarily a bad thing to limit refinery capacity based on the idea that we'd like to transition away from oil (somehow!) If you build wider highways, you get more traffic. If you build more refineries, you'll get more oil consumption. If we had a national plan to halt increase oil consumption, then we should work that plan into evaluating refinery capacity.
On the other hand, of course limiting capacity means arificial scarcity and higher prices. Producers and refiners benefit from this. A better approach is to reduce demand and let refiners make their own decisions based on our goals in consumption.
posted by Ares Olympus at 4:59 PM
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