What happens when an oil refinery closes? We are about to find out.
Marcus Ludwig - SHRM-CP
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Oil Refinery About to Go Kaput With Really Bad Timing
With gas prices rocketing through the roof, supply could get even more scarce. A key refinery might be forced off-line prematurely. Putting that in perspective, our recent baby formula crisis was caused by a plant closing at the wrong time. You might want to brace yourself for the sort of gas rationing Jimmy Carter subjected us to in the 1970’s.
Texas refinery on life support
An aging Texas refinery might not make it to it’s?planned?closing date at the end of 2023. That means you can kiss goodbye 200,000 barrels of fuel, per day. The LyondellBasell Industries facility in Houston covers a full 700 acres.
When it was brand new, it was the epitome of 1918 technology. They’ve been patching the hundred and four year old machinery with bubblegum and glue, hoping to keep it brewing petroleum a little while longer, but the equipment had other plans.
If a recent “major equipment failure” spreads to other crucial units, they’ll have to pull the plug, “two people familiar with the issues told Reuters.”
This particular refinery puts out 268,000 barrels of oil per day, along with 92,600 bpd of diesel fuel, 89,000 bpd of gasoline and 44,500 bpd of jet fuel. Diesel grade will be the biggest problem. It’s already in short supply.
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The company rushed to reassure the public the plant isn’t dead yet. “The Houston Refinery is currently operating as planned,” officials said in a statement on Tuesday, June 7.
They committed to keeping the gas pumping until December 31, 2023 and they plan to stick with it. The company “will continue serving the fuels market, which is expected to remain strong near-term.” The fuels market is like a vampire with a straw sticking into the local blood bank.
Not building a new one
In case you were wondering if maybe construction could be ramped up on the new one, the bad news is that there won’t be a new one. When LyondellBasell announced back in April they were closing the refinery down, they noted “the heavy financial burden of upgrading” wasn’t worth it.
Fossil fuels are waning in popularity. “The company determined that exiting the refining business, by the end of next year, is the best strategic and financial path forward.”
It’s not going to be easy finding a replacement, especially not on short notice. This refinery happens to be one of the 25 largest-capacity facilities in the U.S. according to the Energy Information Administration.