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refinery capacity won't stay flat.  There are a ton of projects on the books to take advantage of $16 mogas cracks.  That's about triple what they were in the early to mid 90's.  Diesel crack is also very, very wide.  Refiners see a lot of money to be made in new projects.

If you look in that OGJ link, you'll see a project where Saras is installing a bit more desulph for their gasoline.  It's a pretty cheap fix I suspect.  That puts a big refiner that was historically a major exporter to the USA back in the mkt.  (when we lowered sulfur levels in our gas, many of the European export refiners held off on investment until they could see where things were going to settle out).  

One of my old friends at Chevy told me a year ago they are looking to re arrange the units we put in in 1980-2  + some new ones to allow an additional 100 MBD crude runs.  The $1 billion invested in 80-82 really had miserable payout for 10-15 years as too many people did the same sort of project at the same time.  I suspect all the refiners are doing the same again (herd mentality runs strong).

Capacity creep is a given. With these margins, creep will become a rush until the margins collapse again.

by HiD on Sun Jun 18th, 2006 at 05:17:00 PM EST
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