Tuesday 29 May 2012

Closure of oil refinery in UK

As One Of UK's Biggest Refineries Prepares For Shutdown, Drivers Concerned About Gas Price Spike

28 May, 2012

Back in 2007, BP sold its Coryton refinery, one of the largest in the UK, to Swiss refiner PetroPlus for $1.4 billion. Fast forward 5 years later where we find that shortly after PetroPlus filed for bankruptcy, and was forced to proceed with a firesale of its assets, the European end demand market is so abysmal that a buyer could not be found for even a 30% off firesale. 

As Reuters reports, following a failure to sell Coryton for the low, low, price of $1 billion, the refinery, in dire need of CapEx investments, will be shutting down, and taking about 10% of UK refining capacity with it. "Insolvent Swiss refiner Petroplus' Coryton refinery in the UK is likely to close after its administrator PricewaterhouseCoopers (PwC) said on Monday that it had failed to find a buyer that could pay $1 billion for the site. Petroplus filed for insolvency in December after it could not meet its debt obligations. 

"The current economic environment, the challenge of raising $1 billion (£625 million) of funding for the refinery, including the $150 million capital expenditure 'turnaround' project ultimately proved prohibitive in the face of an over supplied European refinery market for both buyers and investors." 

The Coryton refinery has a capacity to process about 175,000 barrels of crude oil per day and additional 65,000 barrels per day of feedstock. Richard Howitt, the local member of the European Parliament said: "It's a bitter blow for the workforce...I think the process was flawed and that the government should have stepped in." 

It will be an even more bitter blow to the island nation's motorists who will suddenly find themselves facing with other spiking prices, a shortage of gasoline, or some combination of both.

As of January 2012:

Recall from January:
Motorists are facing the threat of fuel shortages and £100 fill-ups after one of Britain’s biggest refineries went bust yesterday.
As well as posing a serious risk to forecourt supplies, retailers say it could see petrol prices soaring to record highs as speculators and profiteers capitalise on the disruption.
Diesel prices in particular are set to rise by up to 3p to a record £1.45 a litre, they warn. That would mean more than £100 to fill up a typical family saloon with a 70-litre tank.
MPs and unions joined the chorus warning of shortages while forecourt bosses said there was a risk of parts of the South East ‘grinding to a halt’ after supplies from the giant Coryton refinery in Essex were suspended.

In other words, 10% of UK refining capacity is about to go dark.
Coryton supplies around 10 per cent of the UK’s petrol and diesel, and 20 per cent of the total in the South East. The warnings came as Coryton’s Swiss-parent company Petroplus filed for bankruptcy with the threat to up to 1,000 UK jobs at the former BP-owned refinery.
But energy ministers and oil industry bosses said they were doing their best to make up the shortfall from the UK’s seven remaining refineries and by buying in from abroad. A sudden rush to the pumps, however, could trigger filling stations running dry.

Naturally, even back then it was the speculators' fault.

Profiteers and speculators in the energy markets are already poised to capitalise on the problems to push up wholesale prices which will mean hefty increases at the pumps, say petrol retailers.

Even before the latest crisis, the AA had warned that motorists were on course for a 2p a litre fuel price hike at the pumps – adding £1.40 to the fill-up for a Ford Mondeo.
The Coryton crisis could see that rise even higher, say retailers.

And now that the crisis has morphed from hypothetical to fact, it will be up to the speculators to prove the scapegoaters right. Because the last thing the UK needs as the BOE contemplates launching even more QE is an actual supply driven spike in gas prices to make the chaos complete once excess liquidity is also thrown into the mix.

Petrol costs end Britain's love affair with the car

THE rising cost of petrol has led to the nation’s love affair with cars cooling, with only 8 per cent of drivers describing their car as a prized possession.

Top 10 best value cars
High running costs and the rising price of petrol appear to have changed attitudes towards driving 

The Telegraph,
28 May, 2012

More than two thirds of people described their car as “purely to get from A to B” and a third were unable to remember their registration number, a poll found.
High running costs and the rising price of petrol appears to have changed attitudes towards driving. A survey of 2,000 people, carried out by WhipCar.com, a rental service, found that a quarter of people believed that it was less important to own a car today than it was 10 years ago.

WhipCar highlighted Government figures showing that the number of people aged under 30 who had a driving licence had fallen by 20 per cent since 1992. Another survey found that 38 per cent of people said they would no longer drive if petrol prices continued to rise.

The price of many popular cars in Britain had also risen well above the inflation rate over the past four years, another study found.

Which? magazine said that, based on the difference in pre-tax prices, after adjusting for inflation, the price of a Volkswagen Polo 1.2 70 Match or Renault Megane 1.5dCi (106) Expression had gone up 8.5 per cent.

Two Vauxhall cars — the 1.9 CDTi diesel and 1.9CDTi Elite diesel — had gone up 7.5 per cent. However, the price of the BMW 3 Series 320D diesel went down 7.5 per cent and the price of the Ford Focus 1.6 Zetec dipped 5 per cent.
Þ A cross-party group of MPs is campaigning for the Government to scrap the 3p rise in fuel duty planned for August. The clause drafted by the SNP has been supported by 28 MPs from nine parties. The campaign, which is backed by FairFuel UK, would amend the Budget and cancel the rise in fuel duty.

American Youth Shunning Cars

These days things are changing as young people are losing interest in cars. As the New York Times details, it's forcing companies like GM to turn to marketing geniuses like MTV Scratch to figure out how to reel the young back in. But is this a temporary slump, associated with the recession or is car culture, just not appealing to today's youth? The Atlantic's Jordan Weissmann weighs in

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