Big Oil Part II; Oil Refineries

In case you were wondering Wikipedia's definition of an oil refinery is; An industrial process plant where crude oil is processed and refined into more useful petroleum products, such as gasoline, diesel fuel, asphalt base, heating oil, kerosene, and liquefied petroleum gas.[1][2] Oil refineries are typically large sprawling industrial complexes with extensive piping running throughout, carrying streams of fluids between large chemical processing units.

Let me make it clear that I am NOT an oil expert nor have I ever claimed to have been. But the fact remains that the current price of oil and oil prices in general affect almost every part of the United States economy and yes that includes the buying and selling of homes. Gasoline prices are affecting where people buy homes, when they buy homes, how much they will buy and whether or not they will buy at all. To be robust on this issue is simply a fantasy as I would hope that we can all agree that this subject is a hot topic right now!

The following paragraphs are merely a "snapshot" of mostly U.S. oil refineries. It seems that in light of the ever increasing prices for a barrel of oil refineries are focused on more profitable sectors of refining. "Gasoline is less profitable than distillates for the refineries, and so refiners want to maximize their production of distillates" said Amanda Kurzendoerfer a commodity analyst at Summit Energy. What is a distillate? To summarize a distillates are used in general for heating oil and diesel fuel. So what does all of this mean? Basically oil refineries are less focused on refining oil for gasoline purposes and more so for "other" avenues.

Below is a summarized list of the top 5 United States Oil Refineries:

1) Exxon Mobil Texas $562,500 barrels per day
2) Exxon Mobil Louisiana $503,000 barrels per day
3) Citgo Corp Louisiana $429,500 barrels per day
4) BP Products Texas $417,000 barrels per day
5) BP Products Indiana $410,000 barrels per day

U.S. total refining capacity = $17,125,000 barrels of oil per day. Of this 19.5 gallons per barrel or about 44% (the most that can be made) becomes gasoline; 7,535,000 barrels of gasoline times 42 gallons per barrel = 316,470,000 gallons of gasoline capable of being refined each day. In 2004 US gasoline consumption was 382,400,000 gallons per day, meaning the United States imports almost 66 million gallons of gasoline each and every day in addition to imported crude oil.

The United States hasn't had a "new" refinery since 1976. Why? Because the cost of building a new oil refinery is at times 50% greater than simply "refurbishing" an already existing factory. Why? Extremely tight environmental restrictions, not-in-my-back-yard community opposition and high cost of building.

Last week refineries operated at 86.6% of capacity and that's up from 85% the previous week. It's projected that during the summer driving season production will increase to 90%.

I must admit this subject was far more detailed than I had previously thought. There is a lot of data to digest, differing opinions on almost every subject, conflicting statistics if you search long enough and the raw reality remains that this subject is very complicated. But the one consensus is refineries are really struggling keeping up with demand from the consumer, technological advances and profit considerations.

Brought to you by Professional Mortgage Group, Inc.
Your Columbia Missouri Mortgage Broker