A lot more products besides gasoline come out of a modern oil refinery. Using catalytic cracking units and catalytic reformers, hydrocarbons can be made into smaller or larger chains with relative ease. Refineries adjust their production according to the market demand for various fuels, lubricants and other specialty chemicals. While refined fuels like gasoline or JP8 jet fuel may have lower demand in the market, other products like cyclohexane or xylene might be fetching a premium so the refinery will ramp up production of those molecules over gasoline production. It's not a simple matter of accounting only for fuel demand/supply economics when it comes to the oil refining business. You have to look at everything a refinery can do in order to see the economics properly.
Excellent comment. Thank you.
I'm aware of what you discuss here, but also know I don't know enough to research it. If you can provide a deeper breakout on production vs market demand vs market changes over the last five years or do, that would be great.
For example, what would drive significant increases in market demand for cyclohexane or xylene (or whatever offsets other production)? Solvents for big pharma vaxx production? But really, anything which provides a deeper grasp of what's actually going on is helpful.
It's been over 20 years since I worked for a refinery (electrical engineer), but I can say that back then the demand for global specialty chemicals was driven by other chemical producers who use various hydrocarbon feedstocks in their own product production. I remember pharma being one of the big customers, but there were many other chemical plants that took our products for production of engineered resins and for elastomers. The refinery I worked at had specialized units for producing intermediates for agribusiness and even produced MTBE (methyl tertiary butyl ether) under license from ADM (Archer Daniels Midland- evil company) for blending ethanol derived from corn into gasoline. We also produced fuels and lubricants under license for other oil refining companies that did not have market presence in the regional area. Yes, refiners can produce product for their competing companies if there is money to be made. Exxon might have gas in the station tanks made by Chevron and vice-versa. Pretty crazy, right? Reminds me of the days when AMD would make Intel processors under license in their fabs, but that no longer happens because of bad blood.
I never really delved much into the trading and market side of the business. I do know that the trading was fierce and a ship's contents could change owners several times en route to the port it will unload at. Buying and selling oil while on the ship is a big thing and we had a special group that did nothing but trade product that was coming or going on a ship while it was at sea. The market demands did influence the configuration of the plant, but some products require too much time to shift as there are process and mechanical changes needed to make that happen so some oil derivatives were only made if there was a good long term forecast for such products. Other chemicals could be pulled out of a tank and reformed into something else if the market got hot for a particular product. They really do move around a lot on production and it was fascinating to be a part of it even though it squelched my desire to continue on with EE work. Switched careers to programming and I'm much better off having done so.
This might not be what you were looking for here, but my process engineering friends and colleagues knew that business way better than I did. Many of them are still in it today but that ship sailed for me and I wouldn't go back even if I had no other options. It was a cut-throat game and I worked for tyrants. Never going back...
This is the first human conversation we've ever had. Thank you for that. While it's not specifically what I'm looking for the commentary is interesting. I appreciate you taking the time to share.
Thank you.
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