Isn't it in the oil companies own best interests to not build oil refineries?

New capacity would mean a greater supply and less demand which would mean lower prices, the oil companies know that their wells can only provide a finite amount of oil, by decreasing production they maximize the price for that oil and make the greatest profit.Isn't it in the oil companies own best interests to not build oil refineries?
Absolutely true. If there was true competition between oil companies there would be no advantage to limiting supply by limiting refining capacity because the competition would fill the void.





In fact there is no such competition and all oil companies benefit from controlling the refining rate...Isn't it in the oil companies own best interests to not build oil refineries?
Yes, it is, for now. Oil experts state that the investment required to build new refineries is too vast, in consideration of the Bush strategy to increase capacity of biofuel, and, the uncertainty or volatility of refined oil prices.
Of course it is, but you have to understand the tremendous red tape that has been put in place by politians beholden to the radical environmental agenda. If you cannot reasonably build a refinery because it is impossible to do so feasably because of environmental rules, why would you build one?





Also notice that oil companies want to drill in the gulf and in ANWR, which would probably bring down the cost of oil/gasoline, but this has been blocked by Pro environmentalist Politiians.
However if profits suffer because the price gets to high then it would be beneficial to build more refiners
Yes, there are many who claim that environmentalists won't let them, (%26amp; that may be true too), but they are quite content operating at close to 100% capacity. If they did open more refineries, and the price of oil dropped, as it always does, they would be stuck operating money losing refineries and/or become forced to lay off employees.


Refining capacity is only one of several factors though, the price of crude, the price of ethanol, (%26amp; the fact that we have to import most of it which gets taxed like $.40-.50 a gallon), are also major contributors, of which the oil companies have no control.
What you are saying is pretty obvious.The refineries are old,falling apart,and they have not had any real incentive to build new ones.The Oil Companies have been enjoying record profits for a long time now,they claim that environmental restrictions are holding them back.Our Government and Representatives are not protecting the well being of the American public,they are sworn to protect us from all threats,foreign and domestic.To me this high price of Oil,and their inability to find an alternative,is a threat,it should be given the highest priority attention.They have hesitated too long,and now we all suffer at the hands of Big Profit once more.The big three are gaining rights to the Oil reserves of Iraq,right now,and I do believe they have an eye on the Iranian Oil,They want this Oil mess and profit making to go on as long as they can stretch it.At any cost,even War,and they shall have it.We are hostage to their greed.
it is in the companies interest, to repair, and not spend billions, on new infrastructure. this is how you maximize profit.
Its a matter of marginal revenue versus marginal cost. There is a point where profit will be maximized for a company. Oil companies might make MORE profits if the price of gas fell. They would sacrifice margins for more volume.





However, due to the amount of bureaucratic red tape, the cost of building new refineries is prohibitive, and thus, no new refineries have been built.





Regarding the in-elasticity for demand for gasoline, that is true to an extent. However, there is some elasticity, as Americans could choose more discretionary trips if gas prices fell.
You're right and wrong.





Demand for gasoline will not change anytime soon. So building more refineries would cost more overhead while increasing supply thus driving prises and profits lower.
Naturally the congress and president do nothing to make them hold down prices. If we had a real president He could freeze the prices like Kennedy did to steel back in the 60's. Penalties on the industry failure to improve things could do much more than chatter.
no


maximize profits with the least amount of investment.


Refineries cost money to build and a ton of money to operate and maintain. They also depreciate overtime.


They must store more oil, buy more oil and that means a lot more money has to be tied up in OIL reserves.


Oil that just sits there... isn't much good to the oil giants.


So... they have what they have already now.


They will charge the market price.


And if its high, they will profit.


IF some guy with lots of money 10 billion dollars decides enough is enough, and builds a bio fuel refinery.... (if he isn't assasinated or mysteriously dies), then the oil giants will continue investing as little as possible.....


... milk the profits with what little machinery/refineries they have.
Why would an oil company CEO bother? Roadblock after roadblock from the NIMBY and environut crowds. Incentives matter, whether the left wants to believe it or not.
First, you don't seem to realize that the refiners are often not the E+P companies. The industry is a lot more fragmented than you appear realize.





Second, in either case, no, it's a low margin industry thus volume is important.
We don't need more refineries. We need a leader that will push for the development of a more affordable alternative to the combustible engine and the petro they drink. If you drive a gas hulk that gets 14 Mpg and gas is hurting your wallet, then you deserve it. Getting rid of our current Oil administration would be a big step towards ending America's Oil addiction.





Saudi Arabia is the biggest exporter of oil and islamic extremist state supported wahabism. But Bush and those guys are good buddies, and they have gotten a free pass in the war on terror. And they are still setting up madrasses in fundamentalist hot beds like pakistan.
It would be.





The reason why none have been built in the last 30 years is because of environmental laws, not the doing of oil companies.
It would also help if people stopped driving 80 miles an hour, drive smaller cars and oil companies caring about more then just profits.
their best interest is to make money.
YOUR THINKING OF THE WRONG SUPPLY SOURCE. THE SUPPLY SOURCE IS NOT THE REFINERIES, THE SUPPLY SOURCE IS THE OIL BEING PUT INTO BARRELLS TO BE SOLD TO REFINERIES. THEN IF THE SUPPLY OF OIL WAS LESS (BEING PROVIDED TO REFINERIES) THEN YES, THE PRICE WOULD BE MORE IF THE DEMAND REMAINED THE SAME.
Absolutely in their best interest. That is how they make the enormous profits. If there was enough refining capacity they would be able to produce enough for the demand. The principle of supply and demand would prevent them from having huge profits. To get prices down we need to use less oil, which is not likely, or force the building of more refineries.
Yeah just like their shutting down refineries to 50% and slowing down the process to change to the summer blend.. blah blah.. boils down to the slower they go makes them more dough. They are controlling the supply and demand so they can make record profits. This is what has to be investigated. I live in Michigan.... yesterday, not sure haven't checked today, we had the highest gas prices in the country. It was $3.69 down the road. Now of course we have morons in our state govt. that have been talking about raising the gas tax again even though I believe it is the highest at .57 a gallon. We have stations here that are shutting off their pumps because it costs them money to run them. This is turning into a horrible situation and I don't care what moron types out the reality of the gas price bs, it is greed and someone in congress or all of congress has to put a stop to it. They don't realize that this is going to ruin the economy soon?





Edit: I knew I wouldn't get away from doing an edit. Ugh.. guy up top mentioned the EPA.. do you mean the Republican started and ran EPA? Nothing like their own people telling them they can't build refineries huh.. no back pocket stuff going on there huh? What a joke.
how can i hear on the newsd that the price of oil per barrel went down, but the same day the price of gas went up .