Is Valero Being A Bad Player Or Misunderstood?
Mar 12th, 2009 by RSmitty
kavips, a Delaware (I assume…he/she is so darned secretive) blogger, who has some very well thought out posts (see his/her economic recovery post for an example), put one up the other day that is absolutely worth some deeper thought and investigation. It is about the Delaware City Valero Refinery and their apparent shut-down in response to serious equipment issues and resulting disharge of crap (how can you better explain it) into the air we all breathe.
Here is a link to the post and a snippet that deserves some deeper looks:
The repair is minor and can be accomplished by shutting down only one unit. So say those who work there. In fact, that is what they wanted. They do not want to be not working right now… Local management forwarded their proposal up to headquarters, from where this verdict was returned: shut down the entire plant indefinitely.
We are told that the repair could be patched in one day. They did it all the time when gas was selling well over $4.00 a gallon.
So why would they shut down the entire plant for a four hour fix on just one unit, now that gas is way under $2 dollars as gallon?
They tell us this. To create a scarcity of product…
…By creating a shortage throughout March of refined gasoline being bought up and down the east coast… they hope to artificially support this summers price higher than it needs to be.To be clear, this decision came from on top. It was met with chagrin by local plant officials.
…
Refine here, refine now!
(Actually I am OK with high gas prices… they only hasten development of alternatives. )
True, noman, but the point being is Valero manipulating a market condition to create an artificial result to their benefit and consumers’ detriment? FWIW, I am all for alternatives, anyway, but I am looking at this from a point of economic manipulation, not of environement intertwining with energy.
Oh, to add, I hardly think you could lump kavips into that “drill, baby, drill” crowd.
The bottom line for me is they better take care of any harmful conditions affecting the local population first and foremost regardless of the financial impacts to the company or the product.
Agreed, John, but as kavips points out, there is word floating around this allegedly is not a multi-month repair as they press released. Rather, it is allegedly a multi-hour process.
Yes, fix it, PLEASE fix it properly (I get to experience Valero’s by-product every so often as well), but if there is economic manipulation at play to the detriment of consumers, then there is a problem of a different sort, for sure.
I wonder if instead of manipulating price, they are manipulating emissions? In other words, by shutting down completely, are they deliberately reducing their total emissions to a point that won’t generate a fine or a mandatory shutdown? I’m not sure over what period emissions are measured for regulatory purposes.
Of course, they may be manipulating price as well as emissions. Why get fined for polluting at $2/gallon now, when you can get fined for polluting at $4/gallon this summer?
… the point being, it may be cheaper to reduce emissions by shutting down for a while, than to actually invest in modifying the process to make it less polluting.
True that, too, which gets to the top point, it’s worth digging into even deeper.
Glad to see you back making insightful posts.
I guess this proves that Chavez is not the friend of the poor when he needs to make a buck. What makes him different from greedy Capitalists again? He has guns to back him up and he didn’t earn his share of the market–he stole it.
Are you, by chance, confusing Valero (USA) with Citgo (Venezuela)?
On the other note, the insightfulness really is kavips, I merely am trying to help generate an interest to his posted concern, a concern I share.
…and we’ll leave any inferrence to this being more insightful than my other posts to another day. I noticed all the chatter and subsequent posts it generated, an indication of insight.
Yes, I happened to scan an article about its international operations south of the border a couple of months ago, I was confused. You are correct. Pity, I will have to save a good point for when it actually applies.
“and we’ll leave any inferrence to this being more insightful than my other posts to another day.”
Don’t be touchy, it is a compliment. I hadn’t seen any substantive posts from you for a week.
“(Actually I am OK with high gas prices… they only hasten development of alternatives. )”
norman, do you drive an electric car? Use public transportation? If not, why; your precious ‘alternatives’ are already here.
norman, do you drive an electric car? Use public transportation? If not, why; your precious ‘alternatives’ are already here.
So are flying cars.
The problem is production cost, R&D, and product maturity. Government has a role in clearing the path and setting the table for the free market to develop alternatives. Things like CAFE standards, subsidized battery development, fleet purchases, or even hydrogen R&D.
The free marketeers screwed up alternative energy. Reagan ripped the solar panels off the White House and repealed the 55 mph speed limit, then his Republican successors felt they had to go send our troops to die for oil.
The Big Three squandered all their SUV profits and now is begging for taxpayer cash to retool for electric.