LyondellBasell plans to shut down its Houston . Valero's (NYSE: VLO) Texas City 225,000 bpd refinery has also shut down. U.S. refiners throttle back Q1 output after record 2022 runs By Erwin Seba . The evidence for the impact of the pandemic on the sector is widespread and undeniable. De Haan added that one wild card could be Hurricane Ian, which, as of Monday, was approaching the Gulf Coast. New York gas stations, for example, charged an average of $3.68 per gallon as of Monday, according to AAA. HollyFrontier Corp said in June 2020 it would convert its Cheyenne refinery into a renewable diesel plant that would produce 6,000 bpd of renewable diesel. (Photo by Justin Sullivan/Getty Images) Indeed, Galp halted operations at the Matosinhos oil refinery complex in Portugal from early 2021, citing a 16% drop in throughput in the fourth quarter of 2020. You can received notifications daily or weekly. Find out more about how we use your information in our privacy policy and cookie policy. 'Massive' violations in Ukraine a focus as UN human rights body meets, Court rules New York law violates family planning centers rights, SUZANNE DOWNING: Biden Is Throwing Americans Retirement Savings To The Wolves. But suddenly, an administration that has waged a bureaucratic war on the domestic oil and gas industry since the day it took office has awakened and figuratively said, hey, maybe closing down these refining operations isnt such a great idea after all. Read the full story at theDaily Caller News Foundation. The refinery that subsequently grew at the junction of the Delaware and Schuylkill Rivers today occupies 1,300 acres of urban South Philadelphia landscape, an area that is larger than the. President Joe Biden has repeatedly slammed the U.S. fossil fuel industry for allegedly profiting while Americans are suffering from high gas prices, and he resists expanding refinery capacity, even as he continues to hobble producers, including delaying lease . The American Petroleum Institute (API), which represents most if not all of the companies targeted by the Presidents letter, responded with a letter of its own, offering a laundry list of 10 actions the administration could take to incentivize and enable the industry to start to reverse the capacity shortage. IHS Markit: LNG Can Replace Ukraine Gas Flows To Europe, Biden Threatens End Of Nord Stream 2 If Ukraine Situation Escalates, Goldman Sachs Warns Of An Imminent Oil Supply Shortage, Court Seizes Malaysia Oil Firm Assets Amid $15 Billion Dispute, Saudi Arabias Oil Company Slips To Worlds 3rd Largest Company, Why Russia Finally Decided To Cut Its Oil Production, The Fatal Flaw Of The Renewable Revolution, Biden Thinks Oil Will Be Around For A DecadeItll Be Much Longer. The Biden administration envisions a future where the world is powered by clean energy rather than oil with its destructive effect on the environment. We will remove any comments or commenters that do not follow this commenting policy. Cinquegrana said only one of the four California refinery shutdowns was unplanned. The report was published by environment think-tank Carbon Tracker, Swedish investment fund AP7 and Danish pension fund PKA, and while the environmental think-tank might be expected to lean heavily toward predicting a bleak future for oil refining, the investment and pension fund are merely offering a clear-eyed assessment of where they think investors would or wouldnt be wise to put their money. There was already some contraction happening in the industry as a result of projected declines in U.S. gasoline demand into the future and companies just deciding that the assets were better used as other projects or shut down completely, he continued. Dollar Tree Inc forecast annual profit well below estimates on Wednesday, hurt by elevated freight and investment costs and as consumers rein back spending on discretionary items. The materials provided on this Web site are for informational and educational purposes only and are not intended to provide tax, legal, or investment advice. So who cares about refined products? The Midwest is also seeing supply constraints . Operating refinery capacity in the US has decreased since 2020 Over the last three years, more than 1 million barrels a day of refining capacity went offline a s a result of the pandemic and extreme weather. Francisco Blanch, head of commodities research at Bank of America, points out that the country is still heavily reliant on gasoline despite those goals. The long term aim is for the company to achieve carbon neutrality by 2050. The response, across many parts of the oil refining industry, has been to think of ways of repurposing the existing infrastructure in order to ensure that defunct sites can continue to bring in revenue. The Department of Energy didnt respond to a request for comment from TheDCNF. CAPACITY: 161,000 bpd (Martinez); 27,000 bpd (Gallup). It had been $5.64 last week. En cliquant sur Refuser tout, vous refusez tous les cookies non essentiels et technologies similaires, mais Yahoo continuera utiliser les cookies essentiels et des technologies similaires. President Biden and Big Oil are at each other's throats. Vous pouvez modifier vos choix tout moment en consultant vos paramtres de vie prive. In a letter sent to seven refining and fuel companies, Biden alleges they are engaged in price-gouging and threatens that he is prepared to use all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term, raising the specter that the current President could be ready to resort to even more Jimmy Carter-style market control measures that were tried and failed during the 1970s. We, Yahoo, are part of the Yahoo family of brands. She recalled paying closer to $5.25 per gallon less than two weeks ago. Continue reading this story and get ACCESS to all our content from any device with a subscription now. TOLEDO, Ohio (WTVG) - The company operating a pipeline serving Midwest refineries says it's ignoring an order by Michigan's governor to shut down as she threatens to go after the company's. LyondellBasell plans to shut down its Houston refinery at the end of 2023, impacting 550 jobs. Until now, California fuel costs followed worldwide trends. Our Standards: The Thomson Reuters Trust Principles. While Gas Buddy indicated that gasoline prices would start to ease somewhat this week, Marathon Petroleums 593,000 bpd Galveston Bay refinery is shut down for the foreseeable future, thanks to a citywide power outage during freezing temperatures. "You're talking about a lot of money to get these refineries that are idled up and runningwhen I'm being told five years from now, we hope you don't exist," Cinquegrana says. US governments accomplished this through various methods, including increasingly restrictive environmental regulations. The refinery outages have caused refinery stocksincluding Valero and Marathon--to trade higher on Monday. Phillips 66 announced in November 2021 that it would not reopen the Alliance refinery, which was shut in mid-August ahead of Hurricane Ida. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Thus, the President whose administration has been actively trying to limit the domestic oil industrys ability to get its business done is now so desperate to shift blame for high gasoline prices that he resorts to the pretense of being disappointed that that has been happening. In 2011, the refinery was idled. Of course, high demand combined with high prices has led oil companies to make big profits. Lyondell Bassel called this a "strategic and financial decision." The Houston Oil refinery can transform 268,000 barrels per day of crude oil into transportation fuels like gasoline, diesel, jet fuel, and other products. David Blackmon is a Texas-based public policy analyst/consultant. The Houston, Texas, facility which is operated by LyondellBasell Industries, spans 700 acres and was built in 1918 is scheduled to permanently close by the end of 2023, but could shut down earlier if a "major equipment failure" spreads to major units, two people familiar with the issues told Reuters. Once the assembly line at the Toledo North factory shuts down, Chrysler will begin preparing the plant for the Liberty's successor, scheduled to go on sale next spring. In Germany, the Heide refinery has reduced staff numbers by 106 positions, but is looking to the future with confidence due to plans to change the business model of the plant to concentrate on the production of green hydrogen. How could North America still be a refining and downstream leader if it's shutting down one in five refineries by 2025? Start Trading CFDs Over 2,200 Different Instruments, Germanys Natural Gas Bill Doubled In 2022 Despite Import Volumes Falling, Shells leadership considered ditching Europe. The fragility of the sector as a whole was underlined not merely by the impact of the pandemic, which, in all honesty, left hardly any sector completely untouched, but also by the example of Texas, a part of the world which, over and above almost anywhere else, could surely be expected to be able to cope with any temporary issues caused by wider conditions. More than 1 million barrels a day of the country's oil refining capacity or about 5% overall has shut since the beginning of the pandemic. The industry leader for online information for tax, accounting and finance professionals. read more. Canadian integrated oil company Suncor Energy Inc. (NYSE: SU) has revealed that extreme weather including multiple fires have forced the company to . document.write(write_html); Marathon Petroleum said in August 2020 that it would permanently close two refineries in Martinez, California, and Gallup, N.M. in response to lower fuels demand, after idling the facilities following COVID-19 outbreaks in the United States. hide caption, SALT LAKE CITY, UT - MAY 24: A driver unloads raw crude oil from his tanker to process into gas at Marathon Refinery on May 24, 2022 in Salt Lake City, Utah. Patrick De Haan, Gas Buddys head of petroleum analysis, said in a statement that prices in the impacted areas could go up another 25 to 75 cents before the issues are resolved. The reasons for those closures are due primarily to governments. The permitting and building of a new greenfield refinery would take at least a decade; major expansions take several years from cradle to startup. At the same time, Goldman Sachs predicted refinery rates in 2021-2024 to be 3% lower relative to 2019, something which they felt would lead to more competition and permanent closures. Phillips 66 is shutting down its Santa Maria Refinery facility on the Nipomo Mesa as it pivots to renewable fuels, but it's unclear . En cliquant sur Accepter tout, vous acceptez que Yahoo et nos partenaires traitent vos informations personnelles et utilisent des technologies telles que les cookies pour afficher des publicits et des contenus personnaliss, et des fins de mesure des publicits et des contenus, dtude des audiences et de dveloppement de produit. (LogOut/ Image Drilling for oil . The bottom line here is that this is a problem that has been a long time coming. This would be the latest step in wider moves to shift the company as a whole onto a more environmentally sustainable footing, with two other refineries in Italy already having undergone a similar conversion. The average retail price of gasoline increased 51% in Colorado and 27% in the Rocky Mountain region between the end of December and Feb. 20, according to a U.S. Energy Information Administration . And that's when you shut down refineries," says Denton Cinquegrana, chief oil analyst at Oil Price Information Service. By Mike Lee | 06/16/2022 07:17 AM EDT Denton Cinquegrana, chief oil analyst with the Maryland-based Oil Price Information Service, wouldnt rule that out, but he cautioned that fuel prices tend to be unpredictable. There's just fewer refiners in the U.S. today than a couple of years ago. In other words, governments and/or the green agenda are the primary reason for the expensive gas. Consultants WoodMac, writing in August of this year, predicted a 9% drop in capacity across Europe in the period between 2022-2023, with clients being sent a list of allegedly under-threat refineries which included BPs 377,000 bpd Rotterdam refinery, Totals 102,000 bpd Grandpuits refinery in France and Petroineos 200,000 bpd Grangemouth refinery in Scotland. Additionally, refining investment is still underway. CRONIN: That's Patrick. The refinery has since been bulldozed. While gasoline prices continue to be a troubling political factor for the Biden Administration, the recent inclement weather in refinery country on the U.S. Gulf Coast has caused two major refineries to shut down. When the pandemic hit and demand for oil evaporated during the recession, refineries took a big financial hit when the price of gasoline plummeted. Fire smolders at an oil refinery that triggered several large explosions at the Philadelphia Energy Solutions Refining Complex on June 21, 2019. But this is a problem for which there are no quick remedies. Why are refineries closing amid oil price windfall? Given that the recent COP26 committed governments around the world to measures which would hit targets at or around 2 degrees Celsius depending upon interpretations of the various conditional and unconditional commitments the direction of travel identified in 2017 has clearly remained the same and has, if anything, accelerated. Gas prices started skyrocketing following a raft of sanctions on Russian oil, after its invasion of Ukraine in February. At a time when gas prices are at the highest level in history, hurting regular Americans, he points out that Big Oil companies are enjoying record profits. Refineries will receive a maximum payment of 1.8 cents per litre when the margin they make per barrel of oil falls to $7.30. In one particularly unusual move, India's Reliance Industries said it would simply sell the crude oil that it had in transit at sea, rather than allowing the cargo to arrive at its refineries. Staples says that if the federal land ban continues, Texas is set to lose 120,000 jobs and $65 million in revenue by 2022. The company ceased refinery operations at Cheyenne the following month, making it the first U.S. refinery to close in 2020. Opinions expressed by Forbes Contributors are their own. U.S. District Judge Terry A. Doughty in Louisiana struck down Biden's Jan. 27, 2021, executive order in June, dealing a major blow to the president's plans to cut greenhouse gas emissions from . According to our annual Refinery Capacity Report, 2021 was the second consecutive year of decreasing refinery capacity. Three of the refineries in question were run by the largest US refiner of crude oil, Marathon Petroleum, while one was run by Shell and the other by independent HollyFrontier, illustrating the fact that this is an issue which cuts across operators and impacts the industry as a whole. The U.S. had five fewer. These closures were temporary, of course, but they serve to underline how fragile the infrastructure upon which the industry is based can be, and how external events of varying size and type can lead to not just interrupted operations but complete shutdowns. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. September 26, 2022 Refinery maintenance along the West Coast is being blamed for the sudden spike in the cost of gas across California after weeks of downward trending prices. Throughput at its French refineries was up 3% on the quarter at 274,000 b/d but remained 46% down compared with 2019. Previously worked at Euromoney Institutional Investor and CNN. All quotes delayed a minimum of 15 minutes. The question for anyone working in the industry is whether the sector will spring back as lockdowns lift across the world, or whether the impact of the pandemic was merely an accelerating factor within a process which was already underway. "The Houston Refinery is currently. Not all of those refineries have come back online. In addition to the shutdown of refineries, at least two are set to be converted to biofuel production. Massive Oil Refinery On Track To Shut Down Amid Fuel Supply Shortages, Record Prices. Like Marathon, Valero has not given any indication when the refinery will be back up. Individuals should consider whether they can afford the risks associated to trading. Has Saudi Arabias Relationship With Russia Reached Its Limits? Although the short term issues may well have been driven by the temporary impact of the pandemic, a study published as long ago as 2017 predicted exactly how things were going to unravel across the oil refining sector, with the key driver of change being a global switch away from fossil fuels prompted by concerns about climate change. Another prediction is that overall earnings for refiners could fall by as much as 50% by 2035, from a figure of $147 billion in 2015. . Overall, its throughput in Q3 was 1% up on the year at 1.225 million b/d, but 29% down from 2019. The agreement announced on Sunday will taper into a 7.7-million-barrel-a-day cut from July to December and then to 5.8 million barrels a day from January 2021 to April 2022. LyondellBasell announced in April that it would shut the refinery by 2024 due to the heavy financial burden of upgrading its more than 100-year-old infrastructure, Barrons reported at the time. Right now, all bets are off.. 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