Building a world of
resilient communities.

MAIN LIST

 

US: Panel to Examine Refining Capacity, Oil Stocks

A federal advisory panel will assess U.S. oil refining capacity and crude oil stocks to see if steps can be taken to boost energy supplies, U.S. Energy Secretary Spencer Abraham said on Tuesday.

"There is no question that one of the significant energy challenges we face is insufficient refinery capacity," Abraham said at a meeting of the National Petroleum Council. The council, made up of oil and natural gas industry executives, is a federal advisory committee to the U.S. energy secretary.

Abraham also asked the council to study current assumptions about adequate U.S. crude oil inventories. The industry now uses a threshold of 270 million barrels to determine whether supplies are adequate or not, but Abraham questioned whether that assumption is "still appropriate."

"It's obvious that inventory levels are one of the things the market watches very closely, and they play a role in setting prices," Abraham said.

Nine industry analysts polled in a previous Reuters survey agreed the inventory figure should be lowered, possibly as low as 250 million barrels.

The crude inventory threshold has been a moving target for an industry that has seen many drilling advances over the last few decades.

In 1983, the National Petroleum Council found the level signaling low inventories was 285 million barrels, which rose to 300 million barrels when the panel again addressed the issue in 1988, before falling to 270 million barrels in 1998.

Last week, the Energy Information Administration reported that U.S. crude oil stocks totaled nearly 303 million barrels, a level that was about 9 million barrels below the five-year average for this time of year. Traders expect crude oil stocks to rise by about 1 million barrels when the EIA issues its weekly report on Wednesday.

John Felmy, chief economist of the trade group American Petroleum Institute, said the current threshold has been used since early 1990s and may be outdated.

"With new technology, we really don't know what that (adequate) level is," Felmy told Reuters on the sidelines of the meeting.

"It makes sense to have another high-quality study," said Bob Slaughter, president of the National Petrochemical and Refiners Association. "Demand for our products has kicked in in a big way."

Record-high retail gasoline prices last month prompted some Republican lawmakers to urge construction of the first new U.S. oil refinery in three decades.

Last week, the U.S. House of Representatives approved a bill that would ease environmental regulations to clear the way for construction of refineries in areas with high unemployment. However, the bill has virtually no chance of passage in the Senate.

Experts estimate building a new refinery would cost upwards of $1 billion. The last independent U.S. refinery was built in 1976.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Find out more about Community Resilience. See our COMMUNITIES page
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.

 

This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.

Tags:  

Former Inspectors Describe Dangerous Flaws in Construction of Major East Coast Gas Pipeline

In April, a massive explosion ripped through rural Salem Township, …

Northwest Tribes Band Together to Stop Oil-by-Rail

There’s no such thing as a good place for an oil-train derailment, but …

The Role of Development Banks in Energy Transition  

Multilateral Development Banks (MDBs) like the World Bank, the African …

Peak Oil Review - July 18 2016

 A weekly roundup of peak oil news, including: -Oil and the global …

M. King Hubbert and the future of peak oil

A new biography reveals the man most associated with the idea of peak oil to …

Hooked! The Unyielding Grip of Fossil Fuels on Global Life

Here’s the good news: wind power, solar power, and other renewable …

Peak Oil Review: A Midweek Update - 14 July 2016

A midweek update. Oil prices were up on Tuesday after OPEC released a …