Shale Magazine Editor-in-Chief - Robert Rapier

Episode Transcript

Speaker 1 (00:01):
Welcome to the nationally syndicated Energy Mixed Radio Show, produced
by the Energy Network Media Group, broadcasting from the Port
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Corpus Christy at PORTOFCC dot com. The Energy Mix Radio
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and government officials on the Energy Mix Radio Show.

Speaker 2 (00:23):
And we're back. You're listening to the Energy Mixed Radio Show.
My guest today joining me is Robert Rapier, editor in
chief of SHEW Magazine. Robert I would say, welcome back
to the show. But we're continuing on creating the second
part to our radio show on all Things Refinery and
trying to help the general public understand a little bit
more about the importance of refineries and how they come

(00:46):
into play here in North America as well as globally.
So we're going to continue on with the conversation. In
our last show we left off with why do gas
prices vary so much between regions? And you were discussed
in California and the issues over there. Can we drill
down to another area that also has a little bit

(01:07):
of some issues, which is the Marcellus show and any
other region that you think we should be discussing pertaining
to gas prices and why they vary from different regions.

Speaker 3 (01:17):
So the issue with the marcell and so there's two
issues with the Marcellus, and one is natural gas. So
and sometimes people say gas when they mean gasoline. Sometimes
they say gas when they mean natural gas. And there
there's been a lot of oppositions to pipelines getting built,
and so you know, the Marcellus is primarily a natural
gas shale play, and so most of what's coming out

(01:39):
of that is natural gas and some of the liquid
byproducts you get from natural gas, but like some of
that is like ethane and stuff like that that we
were talking about in the previous show. It can be
used to make ethylene and the polyethylene. But that kept
natural gas prices there depressed because they were sort of stranded.
They wanted to expand, and people were opposing pipelines and

(02:01):
so forth. So that hurt the natural gas market there
and slowed down the expansion of natural gas development there.
But the whole area suffers from not having access to
the shale oil. From the shale oil boom, so we
saw big discrepancy. And I remember somebody asking me, how
on earth is a refinery in New Jersey going bankrupt

(02:24):
when refineries on the Texas Gulf Coast are making more
money than they've ever made before.

Speaker 2 (02:28):
Yeah.

Speaker 3 (02:30):
Yeah, it's because they didn't have access to that oil
and so they were having to get, you know, more
expensive oil from other places in the world, and they
couldn't benefit from those really big margins. And this particularly
happened when the crude Export Band was still in place
and wt I got really really depressed in price, and

(02:52):
they these East Coast refineries couldn't couldn't benefit from that,
and we saw them try to have worker arounds. We
saw I don't know if listeners will remember the disaster
that happened in Quebec, I don't know, ten years ago
or something, where there was a tanker full of crude.
I think it was coming from North Dakota and it

(03:13):
was going up through Canada and it was going to
a refinery in Saint John's who Brunswick, and it was
parked for the night in Quebec and it rolled down
the hill and derailed, and I think forty five or
fifty people died in the subsequent fire from that. That
was an attempt to get that cheap bocking crude over

(03:33):
to the East coast and refinance. So there was no
pipelines that could get it over there, so they were
trying to get over by rail, and that incident really
hurt the efforts to try to get it over by rail.
And that's sometimes I use that incident say that's why
pipeline are important. I mean, you're transporting oil over ground,
bad things can happen.

Speaker 2 (03:50):
I think we need to have a show on pipelines too,
because I remember, and I don't want to get you
off topic here, but I just remember one time I
attended a protest and in the hill country, Texas hill country,
and there were signs all along said don't ruin our landscape.
And I know they meant by digging it up, but
don't ruin our landscape by putting pipelines. And I it

(04:13):
might have been that they didn't want to disturb the ground,
but it is the safest way of transporting and the
most economical way of transporting whatever. And you know, gas
needs our crew needs that we have, you know, and
other types of commodities as well. So we probably should
do a show on that as well any other regions
that look at variances and gas prices due to just

(04:38):
either over regulation or not having pipelines or access to
natural gas. I mean our.

Speaker 3 (04:44):
Crude well at Texas, Gulf Coast is a whole. Gulf
Coast is a good example of a region that has
access to Canadian heavy crude because they've got you know,
the Keystone Pipeline brings heavy creude down from Canada all
the way down to the Gulf Coast, not the Keystone Excel,
which was never built, but there's an existing Keystone pipeline
that brings down hundreds of thousands of barills a day

(05:08):
to refiners in the US. So they've got access to that,
and then they've got access to heavier cruds from overseas
that are coming in by tanker. So that is an
area where gas prices are consistently among the lowest in
the country, and it's just because they have access to
more kinds of crude. And on the other on the
flip side, you got California, whose regulations make it difficult

(05:29):
to refine there and really make it difficult to do
business in California.

Speaker 2 (05:34):
Let's you know, you brought up the prices, and I
want to switch gears a little bit and talk about
Crede price and why they drop. You know, we see
explain to the listener how we'll see it on TV.
We'll see WTI price and we'll you know, hear it
on the news that it's up or it's down. But
somehow or another of the gas pump, it never changes

(05:54):
and it takes a while for you to catch up.
It's not immediate. On why not gas prices drop immediate
when prices do at crude crude prices.

Speaker 3 (06:04):
That's another good question. It's not your imagination. And in
the refining industry we call this rockets and feathers, So
gas prices shoe feathers.

Speaker 2 (06:13):
I like that. I haven't read that before.

Speaker 3 (06:16):
Prices shoot up like a rocket and they come down
like a feather. And there was a study done on this.
The Wall Street Journal published this a few years ago,
and basically it comes down to consumer behavior. When prices
are going up, people are very discriminating consumers and they
will drive, uh, you know, across town to save a
nickel and gasoline. But when prices are coming back down,

(06:38):
they don't do that. They're just happy to see lower
prices and so they don't shop discriminately, and and and
you know, at the end of the day, you know,
people forget that the refining, the refinery and the person
selling the gasoline, they're trying to make as much money
as they can. That's what they're trying to do. They're
not trying to provide gasoling to you at the cheapest

(06:58):
possible price. So if their price falls ten cents, and
they don't and they don't feel like they have to
drop their price ten since they make more money. And
that's what they're in the business to do. And people,
I think they lose sight of that, and they think
sometimes of the oil companies and the service stations as
a utility that is supposed to, you know, keep costs
low and provides you product at the cheapest possible price.

Speaker 2 (07:20):
And that's not what they do exactly. They're there to
make a profit. But how does that work. Also, if
let's say a gas station purchases a huge volume, right
and they pay a premium price because the price is high,
and then within a week or so the gas prices drop,
you know, for the barrel, aren't they also, though still
legally responsible for selling it at the rate that they

(07:41):
purchased it at and so if it was hired, aren't
they still entitled to their profit margins?

Speaker 3 (07:45):
Well, not necessarily. It depends on I mean, entitled is
a word that you know, it's hard to say they're
entitled to anything. They're entitled to whatever they can get.
And if they're competing service station across the street drops
their twenty cents a gallon, uh, they're gonna have to
keep up, so regardless of what they paid for it,
So it works both ways. You know, it paid a

(08:08):
lot and suddenly the market drops, they may see their
profit margins go negative. And one of the things I
wrote an article about, you know, when when Gavin Newsom
was talking about, you know, windfall profits from oil refiners
in California, I showed that in the past year there's
been like five months out of twelve that the refiners'

(08:28):
margins were negative. The state of California is making over
a dollar a gallon for gasoling there and I think
the average over the past couple of years for the
refiners was like nine cents. So it's the state of
California that's the reason that the gasoling price is so high.
There not the not the over refiners, the ore refiners
make small profits and they don't even consistently make profits.

(08:50):
And that's why the refining business is so tough. It's
not a good business. You know. One of the questions
somebody asked me that came in They said, you know,
Canada produces is all this, Oh, why aren't they building
new refineries? Because the refining business is very risky. It
takes a long time, and you've got to know that
you're going to have crude oil inputs for the next
thirty years. Basically, that's why people aren't building new refineries.

(09:13):
The risk is just too high.

Speaker 2 (09:15):
Well, and that was actually the next question I was
going to ask you, is, so how you know, I
understand that we haven't had major refineries built here in
the US in a very long time. Can you explain
when was the last one and why? Well, I mean,
I know you just said it is because it's a
it's a risky business, like you said, but is there

(09:35):
any efforts or I mean, I guess what I'm trying
to figure out is long term in the future, you know,
what are we supposed to do to keep up with demand?
If we're not building new refineries. So first of all,
when was the last one, the newest? What's the newest
oldest refinery that we have, and what do you think
the solution is for the future with refineries?

Speaker 3 (09:56):
You know, I used to know that, and I don't remember.
It's been like forty years. I mean, it's been a
long time since the last refinery was built. And to
put things in perspective, so I'm looking at.

Speaker 2 (10:06):
Someone in the seventies though right now.

Speaker 3 (10:08):
Yeah, I think so, I think it was maybe seventies.
So I'm looking at the Energy Information Administration's page on refineries,
and in two thousand we had one hundred and fifty
eight refineries and today we have one hundred and thirty two.
So we've lost how many nearly thirty refineries in the

(10:30):
last twenty five years, but our capacity has gone up,
so the existing refineries have more than compensated for the
refineries we have lost. And why is that It's much
cheaper to expand an existing refinery than it is to
build a new refinery. So you know, there's a very
high hurdle for refining. I mean it takes you know,

(10:53):
to build a modern refinery is going to cost you
five to ten billion dollars. That's a major, major expense.

Speaker 2 (11:00):
No idea across that match.

Speaker 3 (11:01):
Oh, that's they're very complicated. I mean if you built
a really simple refinery, but then your economics for simple
refinery are not good because once again you're limited to
buying more expensive like sweet crude if you buy if
you build a simple refinery, and even a simple refiner
is gonna cost you billions. I mean, it's not it's
not going to be cheap. So you know, we we

(11:25):
that it's just cheaper, you know, to expand a refinery,
that is, to build a new one. And the and
the fact that the world here's where I was going. Yeah,
the fact that the world is trying to legislate out
oil and gas. You know, everybody's pushing for electric car
mandates and so forth. Anybody thinking about investing in refinery
has to has to look at that and think, Okay,

(11:46):
you know California is trying to make it where you
can't buy a gasoline vehicle. Is that where things are headed?
If I invest ten million dollars in refinery, that's got
to be for thirty years, and I have to know
that my market is there, that my inputs are secure,
but that my market is there over that time and
that's a big, big risk.

Speaker 2 (12:06):
Right. But Robert, when we get back from break, I
want to talk about gas prices again and how they're
rising in the spring and they fall in.

Speaker 3 (12:15):
The Yeah, yeah, that's a good question. I can talk
about that for several minutes.

Speaker 2 (12:19):
Okay, let's take a flick break. You're listening to the
Energy Mixed ray show, and we'll be right back.

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Speaker 2 (13:02):
We're back. You're listening to the Energy Mix radio show.
My get est today is editor in chief of Shelle Magazine.
Robert Raypier Robert. Before the break, we were discussing how
long it has been and how expensive it is to
consider building new refineries here in the US, and it's
good to see that they're adding on and when to me,
when I hear adding on, they're also retooling it with

(13:24):
the best technologies to of course maintain these refineries. I
talk to a lot of companies that have different product
lines that help detect when refineries are going to go
down rather it's a piece of equipment or something. So
just seeing a lot of investment in refineries to not
only bring them up to a more current state, but

(13:47):
also using technology to help them expand, as you said,
as opposed to having to build a new one, which
is extremely expensive. But I want to switch gears and
talk about gasoline again because I know that there's a
listener who is saying, Okay, I understand the blends, but
I don't understand why right when I'm getting ready to
go on spring break, gas prices are higher, and in

(14:09):
the fall, when no one's driving because it's yucky weather outside,
it's very cheap. Can you explain why gas prices are
always fluctuating? It always seems like when you're getting ready
to go to town for holiday, the gas prices go
up immediately and that could be also for profits. So
but explain the rise in the fall.

Speaker 3 (14:26):
Yep, that's a great question. I'll answer that. But I
looked up during the break when the last oil refiner
is built in the US. It was the Marathon Refinery
in Garyville, Louisiana, and it was completed in nineteen seventy six,
So we're forty nine years since the last refinery. There
is a Dakota Prairie refiner was built in North Dakota
in twenty twenty two, but it's a small it's a

(14:46):
small refinery, sort of specialty and not really lack a
big crude oil refinery. So you know, the last big
crew definery was forty nine years ago. So all right,
your question about gas price comes up all the time,
especially in election. In election years, people always seem to
notice that, hey, it's fall and we're heading into the
election and gas prices are falling. Why is that? Are
they manipulating prices? And I've written a lot of articles

(15:10):
for Forbes and I've said, you know, gasoline price is
almost always fall in the fall in election years, and
non election years. The last time I wrote the article,
I said, in nine of the past ten years, gasing
prices fell between September and December. And why is that? Okay,
So let's go back to let's start the year. The
year starts, we're in a winter gasoline blend, and in

(15:31):
that winter gasoline blend, there is buttane, which is cheap
and abundant, so the gasoline blending components are more readily available.
There's more availability, and the ingredients are cheaper. So as
we head towards spring, the transition to summer gasoline is
going to happen. The buttane has to come out because
the buttane will make gasoline boiled at a lower temperature

(15:54):
in the summer, so we don't want that, so the
buttane has to come out. So now we've removed an
ingredient from gas that is available in abundance. So the
supply now has gone down because we've removed vieutane. And
at the same time, people drive more in the summer,
so just a supply has gone down, demand has gone up.
So by May you almost always see gaslin prices going up.

(16:17):
That happens every year, and then you almost like anything else,
I'll look, and I'll see man airline tickets on spring
break are much more expensive than they were any other time.
Why well, because that's when everybody's wanting to fly, and
so the airlines could say we can charge more money.
Then demand is higher and supply is limited. So you know,
we charge more money during spring break. So in the fall,
then we've gone back to the cheaper winter blend. It's cheaper,

(16:41):
it's more abundant, the ingredients are more abundant, and just
as summer driving season hens and demand has gone down,
and so all those put together mean generally lower gas prices. Now,
the one thing that can trump that is if you
have a hurricane that has knocked off a bunch of
production in the Gulf coast. That can interfere. Because I
think the year Katrina happened, I think we saw a

(17:04):
rise in prices from September to November, but generally speaking,
we see a decline and that's that's why you always
see that decline.

Speaker 2 (17:12):
Very good, just wanted to say as of today, you know,
it's a couple of days ago. It's the Gulf of America.
It's kind of same. Throwing that out there. Okay, let's
talk about crackspread. This is such a funny name, only crackspread.
What is crack spread and why is it important?

Speaker 3 (17:29):
So that is a measure between the cost of crude
oil and the products. And you'll see like you might
see a three two one crack spread, and that that
means like three barrels of oil, make two barrels of
gasoline and one barrel of diesel, And what is the
price differential between those products? And the price differential is
the crack spread. So you're cracking oil into gasoline diesel.

(17:53):
And it's not a direct measure of profitability, but it's
an indicator of profitability.

Speaker 2 (17:58):
That's what I was thinking, that profitability. Why do we
name it crackspread as opposed to just.

Speaker 3 (18:03):
Yeah, Because a lot of other things go into you know,
the profits of refining. There are all kinds of other things.
But if your crackspread is ten dollars and it went
to twenty dollars, generally speaking, you can say your profits
went up. You know, you're the differential between the oil
you brought in and the gasoline diesel you're selling went up.
So that's why people tend to watch crack spreads. It
is an indicator of whether refineries are becoming more or

(18:25):
less profitable and where they were historically. And there's different
kinds of crack spreads, but you know, the most common
one I think is the three two one.

Speaker 2 (18:34):
Can you explain that little bit? Three two to one?

Speaker 3 (18:35):
Yeah, the three barrels of oil making two barrels of
gasoline and one barrel of diesel. And it's more complicated
than that because it makes more products than that, but
just on a really rough scale, that says, for I
paid this for three barrels of oil, and I got
this much for two barrels of gasoline and one barrel
of diesel, and the difference is my crack spread.

Speaker 2 (18:53):
You know, it's amazing to me. It's just really amazing
to me of how we just do not understand how
really complicated this is. You know, I do a lot
of work for the McCain Foundation. It's a great foundation
started by crew traders and they basically give money to
anyone that works in the endustry, oil industry, energy industry
that has fallen on hard times. But it was started

(19:15):
by crew traders. And having a great relationship with that
nonprofit for many years now, you know, I've learned a
lot from them as well. There there are, but there
are a group of folks that are really responsible for
getting kind of everything going in the way, these big
ships traveling and loading them up and buying all over
the world. It's complicated, but I also learned this might
not have very much to do with the crack spread

(19:37):
per se, but just an understanding overall. But you know,
once that commoditie comes out, and you mentioned earlier in
the show, there's there's stuff in it. There's you've got
to you've got solids or water, and they sell that
off and that's a profit and that's a market in
there too, And it's just it starts to it really
turns into this huge thing of you know, one bear

(20:01):
and where it all goes to and how it makes
money in a circle. It's kind of crazy and kind
of complicated. But let's take a quick break. When we
turn it down, I want to talk about gas stations
and how they sell their products. You're listening to the
Energy Mixed radio show and we'll be right back.

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(21:18):
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Speaker 2 (21:22):
And we're back. You're listening to the Energy Mix radio show.
My guest is Robert Rabier, editor in chief of Shell Magazine.
We are discussing the topic of refineries and all the
information you want to know about how they process at
the refinery level. Robert, I want to back up a
lot because we're talking about before the break crackspread, and
I mentioned a group and it kind of took us

(21:43):
off topic. So I just wanted to mention it had
nothing to do with crackspread. It just had to do
with my thought process of how complicated it is wan
you know, to create a barrel of oil all the
different components that come into it, and that's quite complicated too.
But that has nothing to do with the crackspread, and
I don't want to take us off top bank. Let's
talk about how do refiners own gas stations and do

(22:06):
they sell their own products? Because I think we I
kind of think that some of them do, and then
I kind of think that some of them don't. So
that's a question that I have, is do refiners own
their own gas stations?

Speaker 3 (22:18):
Mostly not? And this is a this is a big
misconception because when gas prices go up, people will be
really angry at the oil companies and they'll think, you know,
they're being gouged by the oil companies. Excell Mobile, for instance,
I don't believe they own any gas stations anymore. I
think they sold all their gas stations off, so they're

(22:39):
out of that business, but they still have branded stations.
Most gas stations are owned by individual business owners. Mom
and pop operators own the individual gas stations for the
most part, and so you know you'll see sometimes a
story that you know, during a hurricane, somebody jacked up

(23:00):
their prices. Well, that wasn't the old company that did that.
That was the person who owned that station. And sometimes
they may have had a very valid reason for doing that.
If they weren't going to expect any deliveries anytime soon
and there was a run on their gas, they may
have jacked up gas prices to preserve their supplies. So
you know, there can be a good reason for that,
but that's not the oil company. I got in an

(23:22):
argument with a guy with a big, big megaphone. He's
a very liberal, and he was raging about i think
Exon Mobil and the price of gasoline in California, and
I said, they do not own those gas stations. And
he got mad and put me on blast and said,
this guy is defending Exxon Mobile. And I said, I'm

(23:42):
just telling you, they don't own their stations. I mean,
those those pricing decisions are made by the individual owners
of those stations, and yes it's influenced by oil and
gas prices, but Exon Momen doesn't control that either. So
I said, you know, I don't know why you want
to be mad at x on Mobile over this. They
are not price makers. They're not going out and looking

(24:04):
at their costs and going, well, we're going to charge
eighty dollars a barrel for oil this week. That's not
how any of it works. It's out there on the
on the open market, and people bid on it, and
it's just like the price of a stock, you know,
you know it's Tesla stock worth three hundred and forty dollars. Well,
it is that people pay that for it, and that's
the way it is. That's way oil works.

Speaker 4 (24:25):
Mm hmm.

Speaker 2 (24:26):
That's crazy. And I'm assuming it's probably where they're paying
Exon Mobile a royalty to some degree to have the
brand up there, but they don't have anything to do
with it, like you said, it's just maybe they even
purchased their uh oh yeah, I'm on itms On Mobile

(24:47):
so they can put that name up there in that way.

Speaker 3 (24:50):
But yeah, I think to be a branded station, they
have to buy Exon Mobiles gasoline. But because their price
is spiked up, that doesn't mean Excellent Mobile necessarily jacked
up the price. There there can be all kinds of
reasons for an individual store to raise their prices. They
have nothing new with what they're being charged, and sometimes

(25:11):
it does sometimes, you know, if there is a run
on prices, you know, like in California is a perfect example,
because they've got really limited refineries there that can meet
their specifications. And if one refinery goes down, people might go, well,
why should that affect how much I pay for gasoline?
Because if your cast prices didn't go up and refine

(25:32):
it down, there would be shortages. So that's the alternative.
The alternative is either gas prices go up and people
back off on the gasoline, or stations run out of
gasoline and guess what they usually ration by price. They
raise the price so people who don't absolutely have to
have the gasoline can go, okay, I can wait, and
the people who actually absolutely need it, even though they

(25:54):
don't want to pay that much for it, they pay it.

Speaker 2 (25:57):
Very interesting, let's take a quick break when we were
turning and I want to return to the topic of California.
Why is our gas price is so much more expensive
than their neighboring states. We'll talk a little bit about
their wildfires as well. You're listening to the Energy Mix
radio show, We'll be right back.

Speaker 4 (26:14):
Are you a business owner feeling overwhelmed where to begin
your businesses online presence? Maybe you've spent thousands of dollars
in the past just to be highly disappointed with the results.
We understand because we were once you. Since then, we
decided to hire the very best experts to help us
and you. Let us send you our business profile that
will quickly show you your Google business rankings in these

(26:37):
five areas, reputation ratings, online website advertising and social media,
and search engine optimization. All of these areas really affect
how Google ranks your entire listing. So if ranking on
page one is your goal, pick up the phone and
call us now two ten two four zero seventy one
eighty eight, or simply go to Shale mag dot com

(26:58):
slash business profile out. We'll be in contact with you
within twenty four hours. Once again, pick up the phone
and call us now two ten two four zero seventy
one eighty eight, or simply go to Shale mag dot com.
That's s h a l E mag dot com, slash
business profile, start dealing with a company you can trust

(27:18):
and always find.

Speaker 2 (27:22):
And we're back. You're listening to the Energy Mix radio show.
My guest today is Robert Raypeer, the editor in chief
of Shell Magazine. Robert, we're gonna talk a little bit.
We're gonna switch gears a little bit and talk about
not so much refiners, but California gas prices and a
little bit about their forest fires and how that's kind
of coming into play with some advocates that are out

(27:42):
there talking about climate change in the way of that
the old companies are responsible, So I want to talk
about that too. That's a little bit later on California gas.
It is so much more expensive than neighboring states. Now
keep in mind, you and I went to a conference
in Nevada, the Money Show, which you had a speaking

(28:03):
arrangement and I was there to cover it. And you
also know that my son and many of the listeners
know that my son lives in Nevada. The gas prices
out there when I go out there to visit my son,
they are extremely high considered compared to Texas. Everything is
higher in Las Vegas. And then to think about the
California is even higher and the gasoline is just as expensive.

(28:28):
Why is California's gas so much more expensive than neighboring
states and why are all those states so much higher?

Speaker 3 (28:35):
Well, everything around there is sort of influenced by what's
going on in California. The reason California's is so high
they have created a fuel island there that only California
refiners can meet. It's more expensive to meet those specifications.
The taxes there are higher. There's more than a dollar's

(28:55):
worth of the taxes on gasoline California. I believe that's
the highest in the country there. But so having such
specifications means if a refinery goes down there, gasoline cannot
come from neighboring states to fill that gap because you
can't meet California's specifications. So what happens They have skyrocketing

(29:16):
gas prices anytime there's an upset and people think it's
a conspiracy. Oh, you know, you're refinering with down and
now we have to pay through the teeth. Well, nobody
wants their refinery to go down. I mean, if Chevron's
refinery goes down there, they're losing money on that refinery.
Their competitors may make more money because their competitors Sodden,
are getting more for the fuel they're producing. But you know,

(29:40):
Chevron doesn't want to see their refinery go down. They're
not taking their refinery down to make gasoling prices go up,
which seems to be a common misconception among people that Oh,
how convenient this refinery went down. I see that cinnimon
all the time. Nobody wants their refinery to go down.

Speaker 2 (29:55):
Absolutely. Let's let's talk on one more topic, California, and
then I want you to start reading, if you will,
some of the questions and give us the answers. So
some of the readers that follow you and us in
the show on some of the questions they were having
on refineries. But I want to I want you to
talk to me a little bit about We received an

(30:17):
email the other day from an advocacy an advocacy group,
and I won't mention their name because I don't really
want to give them credit. I didn't align with what
they were saying in any way, but they basically were saying,
from what I read, is that they believe that the
big oil and gas companies that are making record profit,
which of course, is Exxon Mobile, Chevron Shell, you know,

(30:39):
the majors, that they should all be sued because they're
making record profits. Last I checked, Robert, we live in
the United States of America and we live by a
capitalist system. But this these folks want to take their
profits and give it to the folks in California for
their forest fires. And I don't want to sound like
I don't have a thief for the residents of California.

(31:02):
I do, but to read that and to see that
we're going to take from an oil company that's making
profits off of something that everybody is consuming. They don't
have the right to first of all, make a profit,
and it is somehow or another their fault that California
is having all these fires, and that we should take

(31:23):
that money from all these majors integrated exploration companies and
give it to the residents of California. I want to
get your thoughts on. We decided not to cover it,
but boy, I'll tell you that that letter really got
me very upset in the way of how people really
think that they can just go take profits from energy

(31:45):
companies and go and give it out as if we
live in some kind of third world country. So what
is your thoughts.

Speaker 3 (31:53):
Well, how to put this delicately, there are a lot
of people out there with really far far ideas, and
the idea that you would try to take profits from
the oil companies to pay for the wildfires out there
is just to complete.

Speaker 2 (32:12):
Under the name of climate change. Though remember it was
like because they're producing climate change that hasn't even been
proven either in the way of everybody's creating the climate
change because everybody's using the product.

Speaker 3 (32:23):
Well here's the disconnect. Okay, even the big oil companies
out there, the Exxon, Mobil, Shell, Chevron, they have put
a the products they sold which they didn't put the
they didn't put it in the air. People chose to
buy the gas and they decided to pursume the gas.
Ex tiny tiny fraction of what was put in the atmosphere.

(32:45):
Mostly what's going in the atmosphere right now is Chinese coal.
So you're going to sue and try to get money
from the oil companies, which oil is a small fraction
of what's going into the atmosphere in the first place,
and those American oil companies are a tiny subset of that.
But you want to take that group responsible for a

(33:06):
very tiny part, which indirectly they're not even directly responsible
for it. The people chose to burn the product. But
you're gonna take them and you're gonna say, we want
to hold you responsible. We're gonna ignore the fact that
most of it going into the airs from Chinese coal. No,
we're gonna hold you responsible. It's just it's ludicrous. I mean,

(33:27):
it's a complete disconnect about how you know what people
think about what is in the air and why carbon
emissions are going up. It's not exon mobile and chevron
Us emissions have been stable for the last fifty years.
If you look at where it's coming from, it's coming
from Asia Pacific and it's coming from increased cold consumption.
That's why our carbon emissions keep going up. That's not

(33:49):
to say there's not oil emissions up there, Sure there are,
but it's a very small if you had to break
it down as a very very small fraction of what
is there. And so there is no way that you
can try to force them to shoulder the blind well.

Speaker 2 (34:05):
I think it is a dog and pony show for sure,
in the sense that they either do not understand what
they advocate for and how if you're going to talk
about climate change, that's fine, but know where the problems
are coming from as opposed to just putting it on
these big energy companies. And when you and I spoke,
and I will say it on the air, I think

(34:25):
that if anybody wants to complain about climate change, that's fine.
It's you know, everybody has an opinion. But if you're
one of those consumers that's actually driving, you shouldn't be
driving that car. You shouldn't be living in an apartment.
You shouldn't be wearing clothes, but I do hope you
keep your clothes to clothes on. You shouldn't be wearing makeup.
Everything we use is a product or a byproduct, and

(34:48):
it's just ludicrous because everybody is using it, but everybody
wants to point fingers. For me, it was just well,
when all Californias decide to get off of any form
of energy, they probably wouldn't last very long. But then
maybe they could sit there and say that we are responsible,
or energy companies or whoever's consuming this and buying it,

(35:08):
that they're making record profits, then maybe they have an argument.
Until then, it's so disingenuous. You're using the products that
you're talking about that they're creating climate change. Robert, we
got to take a quick break. Sorry, didn't mean to
rant on that. When we get back, I wants you
to read some of the emails and texts that you've
received from the listeners, specifically talking about energy questions pertaining
to refineries. You're listening to the Energy Mixed radio show.

(35:31):
We'll be right back.

Speaker 1 (35:33):
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Speaker 2 (36:12):
And we're back. You're listening to the Energy Mix radio show.
My guest is Robert Rapier, editor in chief of Shell Magazine. Robert,
I kind of left the show on a little bit
of a kim rant, and I don't mean to be
so insensitive to what Californians are going through. I can't
even imagine. My heart goes out to them and it
this had nothing to do with Californians, by the way,
this was just a nonprofit making this suggestion, this ludicrous suggestion,

(36:36):
But it really does fly in the face of if
you want to sit there and say that anyone is
leading to climate change, but yet you were using the
products that you're claiming, are you know, actually part of
the problem. According to you don't want to look at
the real solutions or the real problems like China. As
you said, then you can expect a rant from Kim

(36:58):
because I don't. I think you need to get off
all the products that you're buying. That's why they have
record profits, and that's why they deserve those record profits,
because you're the consumer.

Speaker 3 (37:06):
What do you say, Robert, Yeah, So the other thing
is all these people wanting to sue the oil companies
over climate change. You say, well, you caused this. Okay,
Well let's set that aside for a moment and say,
where in there are you giving them credit for your
ability to be mobile all these years? Where would you
have been without that gasoline? I mean, you couldn't have

(37:30):
driven a car, you couldn't have flown an airplane, all
those things, you know, the fire.

Speaker 2 (37:34):
Truck, bus, a bike, nothing, you'd have to walk exactly everything.

Speaker 3 (37:39):
So we're saying, oh, we're gonna blame them for all
these things. And again, when I was at the service
station yesterday filling my wife's car, I thought, how amazing
is this and how much do we take it for granted?
I mean, I can pull up here, and you know,
I'm not on a horse, I'm in a car. I
can pull up in five minutes. I put enough in
there to drive another three hundred miles.

Speaker 4 (37:59):
That is amazing.

Speaker 3 (38:01):
And yet we take it completely for granted, and we're like, okay,
but you caused climate change, and we're going to sue
you because this is your fault. It's not my fault
for driving the car around. And I'm not going to
give you any credit for the fact that the ambulances
have run all these years, and the fire trucks have
run all these years, and the whole transportation infrastructure that
has allowed the economy to grow to where it is

(38:21):
has run on oil. Now I'm going to blame you
for this problem that you didn't principally, cause.

Speaker 2 (38:30):
It's not just that Robert. I don't know. I'm not
trying to get into age because I certainly don't want
to show mine. But I remember living in Houston in
nineteen seventy three and my mom and dad had a
little the Mustang that was very popular. As a child,
I can remember sitting in lines for hours and hours
and hours just to get to the pump and it

(38:51):
ran out of gas. It's part of the reason why
I wanted to cover energy, because people just really don't
understand what happens, how society really breaks down in the
worst ways when we do not have enough gasoline in
our gas things and thinking it was power break. And
I remember really the Trumba sassed as a child, not

(39:14):
wanting to go together with them all these fights, and
people don't remember that embargo of nineteen seventy three. They
don't remember, or maybe they weren't born yet to understand.
We have to find a solution to our energy needs
and crisis. But it's not this way. It's not removing
and taking more off because it is such a vital

(39:35):
commodity that actually sustains life and keeps us in some
kind of a process that is not where we're actually
civil Civilits fine to put a fine point on it.

Speaker 3 (39:48):
That's the point I've made before is if you want
people to really understand the important role of oil and
gas in our lives, just shut down old production for
thirty days because into.

Speaker 2 (40:00):
Thinking about we'll see what happened in nineteen seventy three
when I was a child, And I'm telling you, fights
will break out everywhere. It will become just massive, massive
fights and arguments and screaming and yelling an arctic all
in the streets. It will it'll look like a hurricane
hit us or worse.

Speaker 3 (40:18):
Before people were starting.

Speaker 2 (40:19):
I mean you, it would be dying.

Speaker 3 (40:23):
You know, it's and we just take it for granted.

Speaker 5 (40:26):
We take it completely for random because they don't either
they either don't remember it or they weren't born yet.
And more than taking that great to the grant letter
and running that nonprofit is not even born and is
not even probably born in nineteen seventy they're were born afterwards,
so they missed the whole thing.

Speaker 3 (40:43):
Yeah, we take it for granted, to the point that
we're suing the company. We're suing the companies that have
made all as possible.

Speaker 2 (40:49):
Yeah. Yeah, So let's move on to the questions that
I want to get to before we get to the
end of this segment. Go ahead, how about if we
start with this, read some of the questions, and I'd
like for you to give us the answers too. So
I just want to hear what the questions are. I
might pop in there, but you're the expert, so I
want to hear what our listeners are asking you questions are.

Speaker 3 (41:10):
Okay, So I got a number of questions. We've answered
some of them already, but you know, here's some that
are left. One person asks, why are low oil prices
bad for refineries? It seems like low oil price would
be good for refineries. Well, the main reason is, let's
say all prices are low and they're staying low. That
means gasoling prices are probably all so low. And when

(41:33):
you see expanding margins is when all prices shoot up.
Usually gasling prices will shoot up even more. And then
when all prices start back down, that's when you really
see margins start to expand because gas prices again, they
go down like a feather. But when all prices get
to a low level, and if they stay there, gas
prices will eventually drift down and you will see low margins.

(41:56):
So low all prices means low margins. That's why prices
tend to be bad for refineries, because that's only one
part of the equation. Yes, the input costs are lower,
but the profit the prices you're getting for the products
are also lower. Somebody asks if improved efficiencies and refining
will delay the need of building new facilities.

Speaker 2 (42:17):
I talked about that before.

Speaker 3 (42:19):
You know, we've lost nearly thirty refiners in the last
twenty five years, refineries in the last twenty five years,
and yet our refining capacity has gone up, and that
is a matter of just expanding the existing refineries and
you know, so yeah, it's it's horrendously expensive to build,
to permit, it takes a long time, and so that's

(42:40):
why we've expanded refining capacity through expanding existing refineries.

Speaker 2 (42:47):
And Robert a question on that though, is is it
similar to like we're seeing how energy companies are lowering
their admissions air admissions just by using technology that is
now evolving to handle and create a place where they
can actually lower it. Why is it in the same

(43:07):
way the same thing whereas we're just using the refineries
are using technology to not only expand it but also
to refine it in a way. It's just more cost effective,
it's more reliable, it's more efficient, it's more you know,
just put all the the newer technologies into it to
allow it to do even more with less.

Speaker 3 (43:28):
So a bit, but mostly not because mostly refining is
a pretty mature technology. So there are really groundbreaking things
that are getting us two or three percent more products
out of a barrel of crude oil. Those technical refining
you know, has been around for one hundred and fifty years,
and although there have been major developments during that time,

(43:51):
in the past few decades, there's not been any really
major developments that are allowing us to get a lot
more product at cheaper cost. Yes, to run them better
and more efficiently and so forth, but mostly it's just
adding capacity, putting bigger stuff in there, and bigger pipes
and bigger equipment.

Speaker 2 (44:08):
And so forth. Oh I see, okay, perfect well, Robert,
that is all the time we have for this show.
Thank you for teaching us about all things that pertain
to refineries, and we will be taking questions. I think
the next one that we should try to look at
is pipelines and information on how do the pas in

(44:30):
the midstream and how do they exist? And how much
pipeline do we already have, what is the need, how
are they created? And the permitting process and everything else.
But I'd like to lead the listeners. If you have
a question, please be sure to email editor at shell
meg dot com. That's editor at shell meg dot com, Robert.
Thank you for joining me today. I had a great

(44:50):
show and I'd learned so much from you.

Speaker 3 (44:52):
Yep, thank you anytime.

Speaker 1 (44:54):
The Energy Mix Radio show is where we explore topics
that affect us all in the oil and gas industry.
Every week, our host will interview the movers and shakers
in this fast paced industry. You'll hear from industry experts,
elected officials, and many more on the Energy Mix Radio Show.