<p>I know that several factors, such as supply and demand, contribute to the rise of prices of products in a country. For gasoline, I assume that the supply does not meet the demand and makes gas more valuable and expensive. But, if I disregard economics and the politics behind gas prices and direct my attention to the science/technology aspect, why is gas so difficult to produce (refine) that the supply does not meet the demand without prices being raised. I’ve heard that the process of refining crude oil to usable gasoline is expensive and time-consuming. Why?</p>
<p>I am a petroleum professional (geologist) in the exploration and production of oil and gas… so refineries are not my bread and butter but I think I have at least a knowledgable laymans view … here is what I would say.</p>
<p>First,(and I am knowedgable here) Oil itself is a finite -albeit large - commodity, it is also distributed unevenly around the world. We all know many of these places have political issues-Kazakastan, Saudi Arabia, Iran etc… difficult environment deep water, alaska etc… more and more of the resouce is expensive to recover, meaning it is not produced except at higher crude prices. Demand -as is well publicized -is growing in China in particular</p>
<p>Second Refining capacity … It is capital intensive and requiring lots of enenrgy and more and more expensive crude. So there is a barrier to entry so to speak, </p>
<p>Third, There have been very few refineries built in last 25 years due to “Not in my backyard” and environmental issues</p>
<p>Fourth, (well you can’t seperate technology/science from politics) but the process of conversion is chemistry of breaking down Carbon-Hydrogen complex molecules into simpler ones that are diesel gasoline etc… I am not an expert in this field, but the technology seems old… There is the capability ot use grain alcohol to create gasoline like fuel, and in a retro process --turn --more plentiful --natural gas into liquid fuels… </p>
<p>The ‘technology’ is there for these processes they havent made economic sense, but that could change with higher prices, ultimately setting the stage for more supply and less demand for refinery generated fuel ----in a classic Adam Smith action… to maintain cheap, plentiful energy</p>
<p>citygirlsmom
don’t follow your logic… the higher oil prices have been cutting into refining margins --though for sure the producers (such as ourselves ) are seeing increased profits, – don’t really know how the china /unocal factors into your thoughts, my feeling is that the people being hurt by the china bid are at chevron, which dont have the cheap china money</p>
<p>Also you may know a refinery in Bakersfield was shut for a combination of bad economics and environmental regualtions (i lived in Bakersfield for a time - and i think the environmental concerns are real)</p>
<p>Oh and i like the biodiesel idea… i actuall ythink the biggest hurdle is gathering the grease from fast food plaaces, …i see a network of lpipelines connecting fast food outlets gathering the used vegetable oil for bio diesel</p>
<p>Exxon and Mobil plus Bill Clinton equals ExxonMobil
Chevron and Texaco plus Bill Clinton equals ChevronTexaco
BP and Amoco plus Bill Clinton equals BPAMOCO</p>
<p>See any trend here?</p>
<p>Funny, how the bloody liberals kept their heads in the sand while the Clinton administration approved the consolidation and monopoly of oil. Yet, the liberals scream at the tops of the voices about how corrupt Republicans are for backing Big Oil. Bill Clinton is Big Oil and you liberals looked the other way. Liberals got what they finally wanted – higher gas prices.</p>
<p>There is also the issue of refining for numerous different state standards. I think (?) I heard there are over 1000 different required formulations over all the different states/provinces/countries in North America. If every formulation needs a new configuration in the plant, no wonder prices are up at the pump.</p>