We read a lot today about what's causing the high price of gasoline. Some point to the fact that we haven't built a new oil refinery in America in twenty years as a cause. To understand why this is wrong, we need to understand a bit about what a refinery does.
Crude oil is a complex mixture of many hydrocarbons. The mix varies from field to field, and is so distinctive that by analyzing the proportions of the various compounds, we can identify which field produced any particular crude. Very roughly, the components are categorized as asphalt, fuel oils (including heating oil and diesel), gasoline and liquid gases (butane and propane). These, in turn, are mixtures, characterized by the range of their boiling points. Refineries separate the crude into these component mixtures, (by boiling, hence the characterization by boiling point) then perform chemical reactions on some of the mixtures, converting them into motor fuels. (Lubricants require a special kind of crude and this article won't discuss them.)
Gasoline represents the largest proportion of fuel demand from crude, and refiners have developed chemical reactions to convert some of the other components of crude oil into gasoline blending stocks. These converted gasoline stocks vary in octane rating. ("Octane rating", or just "octane", is a measure of how well a fuel performs in a standardized laboratory engine. "Premium" gasoline's octane is usually 91 while "regular" is 86 or 87.) "Straight run" gasoline comes directly from crude and needs no further processing, but its octane is only about 75. Your car would cough and choke trying to run on it. For comparison "alkylate" is a gasoline stock made by combining two forms of butane in a sulfuric acid bath. Its octane is about 100. Other chemical processes produce gasoline stock by breaking down heavier fuel oils into gasoline stocks. These have varying octane, and refineries blend these component stocks to produce gasoline with octane corresponding to regular, mid- and premium grades.
It's important to note that each of these processes operates independently of the others, and that each gasoline stock has its own separate storage tanks. This allows the refinery to keep operating while any individual producing unit is shut down for maintenance or to correct problems. Many people, including some on Gather, believe that refineries have to shut down in the spring to "reformulate" into summer gasoline blends. This is patently false. In the spring, demand for heating oil drops, but demand for gasoline has not yet increased for summer driving, so overall demand is at a low point. Refineries typically schedule shut down of individual processing for cleaning, repair and inspection during this spring lull period.
So, what is this "reformulation" that's required for summer? Gasoline must vaporize into your engine for it to burn as fuel. Liquids, no matter how flammable, do not burn. Only the vapor that evolves from the liquid surface actually burns. However, if the gasoline is too volatile (vaporizes too readily) it causes the fuel pump and lines to "vapor lock" and your engine stalls or won't start). To aid and control the vaporization of gasoline, refineries add very volatile butane. In winter, cooler weather allows them to add more butane than in summer. Since butane has a high octane (105), cutting it back requires increasing higher octane stocks to compensate.
Since this happens every year, it is no surprise for refiners. They begin increasing inventories of high octane stocks in early spring, cutting back on production of heating oil. However, storage capacity for individual fuel types is not unlimited. Gasoline cannot be stored in a tank designed for diesel or heating oil. An unusually cold spring may require maintaining high heating oil production longer than expected, reducing the inventory of gasoline stocks below normal for the period. Add to this some unexpected major mechanical problem in a large refinery and a gasoline shortage can result.
In addition, summer gasoline blends require an additive to promote burning - an "oxygenate". The oxygenate additive of choice in recent years is ethanol. Since oil refineries do not produce ethanol, and until the last few years, demand was very seasonal, shortages could occur, which caused price spikes.
So, the next time you hear someone gripe that the high price of gas is due to environmentalists preventing refinery construction, explain to them how a refinery works, and tell them to find another excuse.
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Comments: 17
There are about 125 refineries now, though there are infinitely more vehicles and a disturbing number are located close to the Gulf of Mexico. All, including the 100 year old Exxon refinery in Baton Rouge are operating around the clock at full capacity. Most of the workers at Exxon are contract, and the refinery staff is relatively small especially compared to the thousands of employees who were there 25 years ago. Exxon has managed to cut operating costs and invests little of its gigantic profit into its infrastructure or expansion.
I wonder why a private company has to get permission from the government in the first place.
Col: refineries are potentially dangerous. That's the biggest reason a private co must get permission to build. The concept that what you do on your property can adversely impact your neighbors' property is a basis of modern jurisprudence.
We need a new refinery, by not in my back yard. We need more prisons, but not in my back yard. We need another Wal-mart (not really), but not in my back yard. We need more of whatever, but not in my back yard. Whatever we need build it, but not in my back yard.
People complain about what we need to build, but they never want it in their back yard.