Oil companies won't be building more refineries, because there won't be enough oil left to refine by the time new refineries could pay for themselves.
There are around 800 oil refineries operating across the world each processing between 1000 and 940,000 barrels of crude oil per day.
The world’s top 25 oil refineries go through around one thousand one hundred and eighty three million, three hundred and ninety thousand barrels of oil per day. If you want that in gallons as a number it is 49,698,987,000 (Forty nine billion, six hundred and ninety eight million nine hundred and seventy eight thousand) gallons of crude oil to keep the planet running, and that is just the top 25 of the 800 refineries.
There hasn't been a new refinery built in the US since 1976. (Excepting two at the Canadian border for new Canadian
oil) In 1982, there were 301 operable refineries in the U.S and they produced about 17.9 million barrels of oil per day. Today there are only 149 refineries, and they're producing 17.4 million barrels. This increase in efficiency is impressive but not a miracle. As with everything these outputs are carefully calculated to optimise profitability.
New refineries require tremendous financial commitments which take anywhere from 15 to 25 years to amortise. With record oil prices it would make perfect sense to invest in a few refineries today, except... for the lack of oil to be refined 20 years from now.
Trends have predicted that peak oil production, where the production of oil starts to decline, will be reached around 2007-2010. After that, there will be less and less oil to refine no matter where drillers look. In this context, building expensive new refineries does not make a lot of sense as existing ones will be sufficient to process whatever little oil is left. So forget about new refineries, except for the aforementioned few in the northern Midwest United States to process the heavy oil from Canada.
Crude oil is a finite resource becoming more and more depleted. As such, an increasing demand put on this finite supply necessitates careful management in order to stretch its lifespan and profitability, but this is not so that we can keep the world running a little longer, it is specifically to give us the time to find another true alternative.
If you look at the numbers above it gives you an idea of just how much energy we need to replace.
We are almost looking for the same kind of effective source, 800 plants across the world capable of creating the same amount of usable energy that we are using now at a price that we can afford to buy it.
It is probably the truth that it won’t happen. It has taken the best part of half a decade to build the 800 oil refineries and at the moment with the possible exception of hydrogen we really as yet do not know what new energy product we need to be creating.
There is not another alternative energy source around at this time and estimates on the ability to create hydrogen in the kind of quantity that we require has to include 50 years of scientific development while we learn how to do it.
Only after that period of development in production capacity can we can start to build the Hydrogen refineries that we will need to use.
A lean time is coming for everyone and as the rush for fuel begins it may be that the need for power outweighs the dream of clean and renewable energy sources in favour of getting to work on time or bringing home the shopping.
The financial and investment choices on which alternative to choose as a future successor to oil based products is already under way.
Many of the financial investments are concentrating on the development of new hydrogen powered electric vehicles, yet this seems to be a strange direction as with just a small adjustment the standard piston powered petrol engine can be tuned to burn hydrogen and when using hydrogen as fuel they have the same zero emissions as a battery powered vehicle. GM and Ford have produced hydrogen vehicles which are being tested, and Honda have gone a step further developing both the piston powered vehicle and a Hydrogen generator. Honda imagines a world where every house has a hydrogen generator producing power for the home and the family vehicle.
This unique approach means that there would be no need for the development of large capacity hydrogen plants as each home would make its own fuel.
Taking a different argument the green parties explain that producing hydrogen in these generators is done using fossil fuels and still has a carbon cost. However, the cost is lower and while this solution may not tick all of their green shaded boxes, it may have to be used in the short term if the greenies want to drive to meetings to talk about how bad that solution is.
Transportation is now a basic human need; very few of us live within walking distance of our place of work. Honda are looking to start a small scale production line in 2010 providing units to Japan and the USA and moving into Europe by 2015.
A new fuel is going to mean a whole new infrastructure to supply it, and as we are urgently looking for answers it may well be that the supply and infrastructure base is where the smaller investor can make their money by looking at what may be needed just a few years from now.
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