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cementor · 09-01-2005, 07:12 PM

The underlying problem really is refining capacity. These numbers will not be exact, but here goes there reasonably close. Approximately 3% of the US gasoline refining capacity went up in smoke a couple months ago when the BP refinery in Texas blew up, some of this capacity may be back operational. Approximately 30% of the refining capacity in the US is physically located in South Louisiana. That capacity is currently down due to 1) inability to get personnel to the refinery to operate it, 2) damage or destruction to the facilities due to Katrina. Put succinctly +/-33% of the refining capacity in the US is out of commission. As was pointed out there is little demand in the La, Ms, and parts of Al, but the rest of the country continues to have a strong demand, with a drastically reduced supply or potential for reduced supply. The ares that are in full production are asked to spread their product around to allow all parts of the country to continue to function. This occurs because the national distributors Conoco, BP, Phillips, Exxon and others don't want some markets to dry up and the reduction in supply leads to higher prices and therefore increased margins. Additionally, some folks (independents and majors alike) take advantage of the situation to line their pockets and the futures prices explanation also holds water for many distributors. If you can get the higher price, do it! 'Tis the American way! I was in Canada this week and they were paying over a 1.20$/ litre which is roughly US$4.40/gallon and that was before the storm hit.

Best regards
An Oilfield Service hand!

09-01-2005, 07:12 PM	#27 (permalink)
cementor Crazy Location: Denver	The underlying problem really is refining capacity. These numbers will not be exact, but here goes there reasonably close. Approximately 3% of the US gasoline refining capacity went up in smoke a couple months ago when the BP refinery in Texas blew up, some of this capacity may be back operational. Approximately 30% of the refining capacity in the US is physically located in South Louisiana. That capacity is currently down due to 1) inability to get personnel to the refinery to operate it, 2) damage or destruction to the facilities due to Katrina. Put succinctly +/-33% of the refining capacity in the US is out of commission. As was pointed out there is little demand in the La, Ms, and parts of Al, but the rest of the country continues to have a strong demand, with a drastically reduced supply or potential for reduced supply. The ares that are in full production are asked to spread their product around to allow all parts of the country to continue to function. This occurs because the national distributors Conoco, BP, Phillips, Exxon and others don't want some markets to dry up and the reduction in supply leads to higher prices and therefore increased margins. Additionally, some folks (independents and majors alike) take advantage of the situation to line their pockets and the futures prices explanation also holds water for many distributors. If you can get the higher price, do it! 'Tis the American way! I was in Canada this week and they were paying over a 1.20$/ litre which is roughly US$4.40/gallon and that was before the storm hit. Best regards An Oilfield Service hand! __________________ Cementor If I was any better I'd have to be twins!