Refining capacity mismatch and gas price impact

An article in Bloombergbusinessweek (March 5,2012) describes the East coast refining capacity as dependent on Nigerian oil, but the Midwest refineries process higher sulphur content, cheaper Texas crude. Nigerian oil prices fluctuate with MidEast crisis, and thus make East Coast refineries less competitive, thus causing refinery closures. The resulting capacity shortage and transport costs of MidWest gas have all contributed tothe higher gas prices. Will this capacity mismatch get sorted out in few years ? Will future refineries use equipment that can flexibly shift between crude inputs from different global sources, even if startup and operating costs are higher ? Will a planned pipeline to the East Coast resolve these pricing issues faster than current trends ?

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About aviyer2010

Professor
This entry was posted in Operations Management, Supply Chain Issues and tagged , , , , , , . Bookmark the permalink.

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