"Why would I invest in a refinery when you're trying to make 20 percent of the gasoline supply ethanol?" Sound familiar?
Just over a week ago an almost identical statement was made by the head of OPEC, Abdalla El-Badri. When asked about future refinery plans ge said, “If we are unable to see a security of demand...we may revisit investment in the long-term.” The first quote? None other than Chevron's vice chairman Peter Robertson. Valero's spokesman Bill Day apparently got his copy of the new playbook when he said "That's not to say we've changed our plans, but it's fair to say we're taking a closer look at what the president is saying and what Congress is saying" about biofuels.
Okay... so we now have the US oil majors like Exxon (XOM), Chevron (CVX), Valero (VLO) and BP (BP) parroting the same sentiment as OPEC? This is just possibly one of the most simple minded acts I have seen in a long time. Just step back and look at it. Let's put aside oil prices and resentment they always illicit towards big oil. Let's also put aside whether of not gas prices are justified and assume they are. We also need to ignore the unfathomable profits oil companies make and just accept it is purely a function of scale and there is no market manipulation happening. Assuming all those things are true (they may or may not be, I am assuming they are for the point of the post). Why, why would any business ever align themselves philosophically with OPEC?
Are they just trying to make themselves hated even more than they are now? Is it some twisted masochistic urge the industry just cannot ignore? Why not put Bin Laden on their marketing materials? At a time when you have the Democrats, who hate oil companies only slightly more than they do Republican's in charge in congress and the White House up for grabs, why would you give them more of a reason to vilify in the eyes of American's?
Renewable fuels are being trumpeted as a national security issue. Whether or not you feel they are is irrelevant, the fact is that they are being market this way is what matters. The less we rely on OPEC for oil, the safer we are. Period.
So, now both OPEC and the US oil majors are going to take their ball and go home? After years of telling us biofuels were a pipe dream and would never amount to anything, they are suddenly so threatened that they are going to refuse to add refining capacity? This is their solution? To pout? Jesus, even my four year olds know that is not the way to get what you want.
This is a colossal mistake on the part of the oil companies and they are going to be doing some heavy damage control after this. Here is the question they will have to answer before congress, and yes they will end up there "Why are you and OPEC colluding to keep oil prices high by threatening to refuse to invest in more refining capacity, are you aware your actions are undermining the security of our nation?"
Can't wait to hear the answer.