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Refineries shutting down: Does this mean a recovery?

hypocritexposer

Well-known member
Sunoco, Valero Shut Plants as Fuel Glut Beats Winter (Update2)

By Barbara Powell

Oct. 12 (Bloomberg) -- Oil refiners from Valero Energy Corp. to Sunoco Inc. are cutting the most capacity since the early 1980s, anticipating the coldest U.S. winter in a decade won’t be enough to soak up a glut of fuel.

The returns from processing crude into heating oil for delivery in February are the lowest in six years after the recession cut demand by the greatest amount since Jimmy Carter was president. The margins for making heating oil and diesel may decline 35 percent by January because of the increasing supply, according to Energy Security Analysis Inc.

San Antonio-based Valero shut its Aruba plant and Philadelphia-based Sunoco will idle its Eagle Point refinery in New Jersey. Across the U.S., the Energy Department forecasts heating costs this winter will fall 8 percent, even as the U.S. Northeast, where most heating oil is used, faces prospects for frigid weather, according to Commodity Weather Group, a private forecaster in Bethesda, Maryland.

“Some refiners are not going to survive” unless profit margins recover, said Andy Lipow, president of Houston consultant Lipow Oil Associates LLC, and a 30-year veteran of the U.S. refining and oil-trading business. The most vulnerable “are inefficient refineries with high operating costs, high fuel costs. The East Coast refineries probably carry the biggest risk because they compete with the rest of the world.”

February futures contracts show the premium of heating oil to crude oil, called the “crack spread” in industry jargon, will average $5 to $5.50 a barrel in January, from $8.10 today, said Andrew Reed, a market analyst for Wakefield, Massachusetts- based Energy Security Analysis. That’s down 73 percent from $19.60 a barrel last year, the biggest one-year drop in more than two decades.

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http://www.bloomberg.com/apps/news?pid=20601103&sid=atIwZTvuPsLg#
 

Steve

Well-known member
Obama sure is great he has cut demand for evil foreign oil and slashed evil oil refineries profits down to a point they can "just survive"..

seems the Obama propped up Wallstreet is doing fine..

but no the recession is not over... it has only worsened for mainstreet..
 
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