Tuesday, January 24, 2012

The UK must not lose another refinery

Despite all the anger and outrage you see the BBC whip up on petrol forecourt refining has been in decline in the UK for some time. The reasons are:

  1. Poor margins ( yes really ) - remember refiners have to buy their oil before they sell the products.
  2. Fear of environmental sanctions - large multinationals are afraid on the levels that career politicians will go to for a few extra votes in pursuing what the general public continues to mistakenly believe are all powerful oil majors.
  3. Improved efficiency - we can produce more with less equipment - so some refineries have dropped out naturally - the least efficient ones ( this is capitalism working well ).
  4. Competition from Europe and soon the middle east - the Saudis and others are keen to export products rather than crude. They also need jobs for their exploding populations ( no pun intended ). - imagine the day that the gulf cooperation council announces petrol sanctions against the UK, because that day is potentially coming soon.
The UK didn't blink when ICI was taken over and seems oblivious to the fact that one of the few industrial areas where we were world leaders is quickly being dismantled. The public hasn't realised that many of our major refineries are now owned by non-traditional oil refinery companies.

But the wake up call is arriving today with the closure of Coryton. ( Once Mobil, then BP now a cash starved Swiss company Petroplus ).

Not all refineries are the same, and Coryton produces important products that will be hard to substitute. It also sits next to what was the Shell Haven refinery ( closed and removed ).

Expect the price of Diesel to rise sharply in the South East - if it hasn't already. ( The reason diesel is more expensive than petrol in the UK these days is we now have to import diesel from Europe as its popularity has crossed over our diminishing refinery capability ).

And where is the coalition government on this ?

Well the bad news is that Lib Dem minister are in charge, Cable and Huhne. They are too distracted by their political careers and potential end of them to be looking after the vital interests of the nation.

Huhne has his green fairy land that he inhabits. Reality is coming round soon to knock him out of his delusions.

Cable is too busy hating success and business to notice that ordinary people will soon be stuck.

What will Govt do if Coryton stays shut ? It will have to do something.

Here's what may well happen:

  1. Denial, possibly including something about global warming and biofuels being the future.
  2. Press campaign "do something".
  3. Half baked announcements and calling industry leaders into the dept of climate fairy dreams and/ or Industry.
  4. Cameron takes over from Lib Dem no hopers. COBRA convened - immediate action announced (what is unimportant).
  5. BP take over Coryton again for a temporary time on behalf of the govt.
In the mean time millions of people will have got very hot under the collar in petrol station queues, Labour will blame spiv capitalism, and Conservative poll ratings will plummet.

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