Is it true gas prices would lower if the BP oil refineries operated at 90-100%?
A BP employee told me if there oil refineries actually operated at 100% or atleast 90% gas prices will drop alot. He said the oil refinery rarely operates over 50%. he also told me when ever theres a fire and oil refinery is only operating at 30% they will increase the gas prices and when its back to 50% they dont lower the price back and they keep the profits. If this is true do our politicians know this. Does anyone know or have any info about this.
- Anonymous1 decade agoFavourite answer
Free oil in the gulf.
- LindaLv 44 years ago
As I understand it the oil companies would love to build new refineries and have been wanting to for decades but the environmentalist and the government has been blocking every attempt. If the government would get out of the way more refineries would be built and yes more refineries would help with gas prices since cost is just not based on the price of oil but the supply produced by the limited refineries. Of course even if a new refinery started get built today, I heard it takes like 7 years to get a refinery built and up and running so it will not help anytime soon. We messed things up for 30 years and now we are going to pay the price. Another thing the government could is stop having every state requiring different gas blends. Every state has their own admission regulations and that means different gas. California requires a different gas mix than say Kansas. Having to produce different blends for winter and summer and state to state slows down production of the already overburdened refineries.
- MagickLv 41 decade ago
Not exactly no.
You'd think this would be the case, but currently our demand doesn't meet the need for the 100% production that this employee suggested. If the refineries were to operate at maximum capacity, then they would quickly fill up their fuel storages. Since distribution is handled out of only a handful of locations across the nation, it wouldn't change the current price. The reason is simple, you have a fixed number of trucks that BP (in your example, there are other refineries) owns and maintains. There are also a fixed number of stations.
What is worse, there is a finite time that you can store gasoline before the fuel begins to go bad. Here's the thing. Due to the alcohol in the gasoline (which gives it the octane rating) the "shelf life" of gas is only a few months. That's for the lower octanes like 88 regular. Higher octanes only last a few weeks before the fuel begins to turn. Going bad for gasoline means the components in it begin to break down. Ever try to start a lawn mower after leaving it sit for a winter with a full tank of gas in it? That pulling, tugging, and cursing you feel as you try to get the machine to start, that's because the gasoline has gone bad.
Imagine that on the scale of a huge Gas storage tank, and you see one of the reasons why the Gas companies can't produce at 100%.
- danielss429Lv 41 decade ago
actually right now our gas prices are not ever going to drop much. It was not intended for them drop below $3.00 a gallon, except a recession got in the way. Gas companies have very little control over prices with the United States and rest of the gas guzzling nations signing the Montreal Treaty, and Kyoto protocol calling for reduction in green house gas emissions. The department of Energy in order to meet these guidelines have called for an increase in prices for gas, heating oil, propane, natural gas, and coal. The theory behind this is increase the cost Americans will use less.
Long report, but lots of stuff the government is not telling you.
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- smsmith500Lv 71 decade ago
We have not built a new refinery in over 30 years, in that time we have retired and dismantled quite a few. The price might drop if we could increase the number of refineries, not going to happen.
- Anonymous1 decade ago
I suggest you look at the production, again of the refinery's ( here in US). they are going at capacity right now.
We just need more of them , and since the Liberals always vetoed any more refinery's, we can not produce any more gas, oil. We need more refinery's, and that takes about 10 years to set one up, and start producing!
- SeanLv 71 decade ago
.81 cents on the dollar in gas prices are taxes that was suppose to be used to repair our infrastructure, considering the infrastructure isn't be repaired the tax should end. Then gas would be around .60 cents a gallon.
Gas prices don't drop because of what I mentioned above, government loves money. It's corporatism, government overlooks what corporations do and government profits from it.
- Anonymous1 decade ago
The Majors have bought out most of the independent refineries and shut them down to keep prices artificially high.
- Vito1964Lv 71 decade ago
Yes, but there's no reason to, the demand isn't there.
If I had a candy store and ordered 10 Caramels a day, but only sold 2, yeah, I'd have to lower my prices to move that extra product.
I can fault the oil companies for doing lots of shady things, but there's no shortage of petroleum, so I can't really fault them for this business decision.
- jeeper_peeper321Lv 71 decade ago
They would be lower, because demand is so low.
But they would not be very much lower, maybe 3 or 4 cents.
The profit margin on refining oil into gasoline, is not that much.