Refining Gasoline
From the ground to your car has a number of steps. Drilling, shipping (or flowing through pipelines), and refining. The drilling and shipping is normally done by the big oil companies who are making a pretty good profit right about now. Prices go up profit margins go up and all that. Of course as oil gets harder to get out of the ground, the price of drilling goes up, but over all the oil companies are doing ok. I am always trying to figure out why gas is so cheap though. If $20/barrel oil = $1/gal gas, you would think that $100/barrel would be $5 gas (modulo additives and sunk costs, like the refineries themselves).
Turns out the refineries are sort of taking some of that cost. I assume this is a what the market will bear situation, but it is interesting to note that independent refineries in the US are tanking in the stock market. Turns out their profit margin is way down. They rely on a heavy difference between the cost of oil and the cost of gasoline (the “crack” price) in order to maintain good cash flow to do maintenance and general operations on existing refineries. Not only that, but they also rely on that extra cash to make efficiency improvements. Unfortunately that crack price has dropped to record lows. One of the reasons that gas prices aren’t $5 yet is that the independent refineries are taking it on the chin. Unfortunately this also means that newer more modern and efficient refineries are not being built. As we learn to wean ourselves from oil we also need to be learning how to use what remains with the utmost efficiency. Right now it looks like the refining process may be one of the bottlenecks there.
On the plus side, they finally finished sequencing Trichoderma reesei and most Americans think that the world is running out of oil. Wow. I really didn’t expect that result at all.