You see, you don't just extract the black gold and put it in your tank, your furnace, or your jet. Oil must be converted by taking something "crude," cleaning it up, and making it "refined"-kind of like Eliza Doolittle. You also don't take barrels of crude oil and decide that voilà!-this batch will become gasoline, next week we'll make some jet kero, and in the fall we'll start creating fuel oil for the coming winter months. It just doesn't work that way.
According to the American Petroleum Institute, a barrel contains 42 gallons of crude oil. This barrel refines into gasoline (19.5 gallons), fuel oil (9.2 gallons), jet fuel (4.1 gallons), and other products (11.4 gallons). If you do the math, you learn that the volume output gains 2.2 gallons from the process.
In 1979, while working in public accounting in Houston, I had the opportunity (through one of our oil servicing clients) to visit a refinery in Pasadena, Texas. It was an eye-opening experience. To appreciate fully the miracle of this conversion, every American should experience such a tour. Given the current realities, this won't happen unless you already have enough security clearance to be eligible for a guided tour of NORAD!
Since 1981, the number of refineries in the US has decreased from 324 to 153-a 52% reduction. We haven't opened a new refinery capable of processing 200,000 barrels per day in almost 25 years. Our existing plants have been operating at about 90% utilization since 1992. Taking even one of these off the line would have a significant negative impact on our economy. Projected incremental growth in consumption requires the construction of a new facility each year through 2025. (Check out The Refinery Revitalization Act of 2004 (H.R. 4517).)
These refineries are primarily owned/operated by the major oil companies. But, who owns the oil companies? This gets really dicey. In the beginning ? there was Standard Oil, but this giant was broken up by the US Government in 1911 into at least 18 "baby Standards"-give or take a few. For the next 60+ years, the American market was dominated by the "seven sisters." By 2004, we are left with the "big four"-the survivors being Shell, ChevronTexaco, ExxonMobil and BP.
Shell is still under the umbrella of Royal Dutch Shell, an Anglo-Dutch conglomerate. Most of Gulf Oil-together with Standard Oil of California (and Iowa and Kentucky), a.k.a. Socal-became Chevron, which merged with Texaco to become ChevronTexaco. The Standard Oil(s) of New Jersey, Louisiana, and Brazil became Esso-which morphed into Exxon; while Standard Oil of New York became Mobil, which later merged with Exxon to become ExxonMobil. The British Anglo-Persian Oil Company became British Petroleum; while the Standard Oil(s) of Indiana, Illinois, and Minnesota became Amoco until they merged into BPAmoco, now known simply as BP-which has acquired the Richfield portion of Arco, spinning off/selling the Atlantic portion to Sunoco. The Alaska North Slope (ANS) oil leases held by the BP-acquired Richfield side of the deal had to be sold (?) to Phillips-but that's another story.
If you are confused by who is what, and why, realize that the prior paragraph describes a condensed version of what really happened in the past 20+ years. The pace of oil's musical chairs within the global oil business empires is accelerating. Think also that the national character of every traded corporation's ownership, both domestic and foreign, changes daily with each transaction in the world's stock exchanges. While "we" own chunks of "them," "they" are owning bigger and bigger chunks of "US/us" and "they" have the dollars to do it.
I'm Fred Cederholm and I've been thinking. You should be thinking, too.