Refineries across the country are breaking down with unusual frequency this year, boosting prices at the pump and endangering workers and communities.
The rash of oil plant problems may not be a coincidence. The breakdowns stem from the hard use of aging equipment, a shortage of trained workers, corporate cost-cutting and ownership changes, refinery experts say.
In the first six weeks of 2007, there were 43 incidents involving pipeline leaks, chemical releases, plant breakdowns and fires, more than has been typical, Kim Nibarger, a safety expert for the United Steelworkers Union, told Congress during a hearing last week on refinery safety.
If it continues, this will only add upward pressures on gas prices.
3 comments:
I don't find it coincidental that bad maintenance practices have a two fold benefit for these companies. First in the fact they are able to produce more fuel with lower overhead and then then they breakdown they get to profit from the scarcity issues.
This problem has been well know for at least a decade now as aging plants are kept open longer, "retrofitted" for higher capacity , and are not maintained properly. I have been reading stories about this for a while now. It was a basic assumption that barring drastic regulatory changes it was only a matter of time before this happened.
Yes, boys and girls this is a direct result of "lassie fair" rule-making in basic infrastructure. Small reductions in prices initally will be payed for many times over when the correction comes.
The other, highly ironic, fuel issue is that the Alaskan deposits are getting harder and harder to reach because global warming is making it harder and harder to traverse the permafrost of the refuge.
Having maintenance issues at refineries can be to the benefit of the refiner. As we found out in California's manufactured electricity crisis of 2001, you can game the system when supply is tight and drive prices up.
paranoia alert
losing your refinery to an unplanned upset is not profitable.
Enron shut down plants that were functional to spoof prices up (then restarted them at times). This worked because prices could spike from $30 -->$300. That's a margin change that can lead to temptation.
For refiners, a big spike in gasoline price might be 10%. If a large unit is down, you lose a lot more than that on production rates and in the end may even have to buy in product at a premium to keep your stations supplied.
The problems are indeed age, lengthening periods between planned shutdowns , hard operation to catch these huge profits available WITHOUT doing crazy things like crashing the plant and risking killing people.
BP will pay out billions over those deaths. The others, even if you assume they are absolutely immoral, can do the math.
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