Because the Gulf and Midwest refineries are optimized for Canadian heavy crude.
When the turnaround comes to replace some of those oversized heavy-processing vessels, the preference (in an deregulated market) would be not to replace them.
If epa and other regs that dictate output quotas loosen, it'd been easy for preference to change.
Every refinery shuts down at least twice a year for a multi-week turnaround.
The minimum cost to stay operating isn't paying to keep the high cost vessels running, but to remove and sell them to a place that has that heavy crude locally.
The heavy oil processing is the larger maintenence cost that you think isn't happening.
Who wants to do long term loans and investment in something where PV/Wind/Storage/EVs are evolving rapidly?
Petroleum is based on huge amounts of hidden subsidies as well, which might unwind rapidly (in the five year sense). Example: The US Navy is basically an unfunded subsidy for worldwide shipping.
Oil in theory relies on a threshold of political power to keep carbon taxes at bay, or worse, a huge "they knew" lawsuit/penalty which is increasingly tenuous every year.
But I haven't heard or seen it, but I'm no insider.
Keep in mind that all the cheap, easy, light, sweet crude that is just a couple feet below the ground is LONG gone.
So every oil development is a ... BIG ... industrial project. Tar sands, fracking, shale oil, deep sea drilling, mega mega mega tankers.
First of all, that implies a larger amount of upfront investment. No deep sea oil until you build the huge drilling platform.
But if the return on investment drops sufficiently (or risk profile, etc), then the projects don't start. So the supply starts to tail off. So refineries don't need to be as big. But... they are ALREADY that big, so the maintenance is a semi-fixed cost. So the costs go up. The financing get riskier.
Can you see the spiral I refer to? The oil industry has developed with a certain degree of demand and demand growth to continue its expansion, as extraction has become more difficult.
Now, I think based on my VERY limited research that the shale oil in the dakotas has a certain floor, and production will continue for decades. But other parts of the world may not have such guarantees, especially if the old US Navy decides to stop securing everyone's oil (insert the cheeto talking about everyone freeloading off the USA).
Your intuition is right, but there will be no disruption. The consolidation will ensure that the remainder players have the capacity to keep the music on (of course at a higher product price).
Reverting to processing local oil is both cheaper equipment wise (removing the heavy crude vessels and selling them) and cheaper bc you don't pay to pipe oil with the viscosity of sludge across the continent.
Fed quotas are the reason for the current config, configuration, economics.
The clusters are poor and poor health, but have no statistical significance to pollution levels.
Yeah, because the rich don’t want a refinery in their nice neighborhood. The second order effect being that the cancer is exported to wherever the refinery lands.
https://www.epa.gov/sites/default/files/2019-12/documents/wa...
Get it while it’s hot.