I had a few beverages with my brother over the weekend, at our father’s 81st B-day!!!! Happy B-day pops!!!
Anyways, my brother is an operator for Flint Hills refinery south of the metro. Flint Hills used to be known as “Koch Oil”.
So, here are some bullet points………
The shortage is refined gas, not crude. That is the cause of our major prices.
There is ground work for a new refinery in Arizona. It will take about 2 years to complete. This will assist in generating enough gas out of the crude to meet our demands.
Flint Hills is working on an addition to generate more gas. It is all preliminary and no ground work has been started yet.
EPA regulations are slowing the ground work.
Currently, Flint Hills is making between $5 and $6 million a day in profits from the higher gas prices.
Some refineries are breaking even, not everyone is making money. That is why we have the higher prices. Some refineries purchased “futures” (bought today’s crude 6 months ago at the wrong price), that is why they are only breaking even and no profits occuring.
When a refinery buys wrong, they jack up their price to break even. This allows other refineries who bought “right” to sell at a higher price and make profits.
It takes approximatley 3 hours for Flint Hills to turn incoming Crude, out of the pipe to Gas in a tanker. Turnaround of the product is very fast. Some formulas required do take longer.
Flint Hills provides approximately 50% of the gas for the state of Minnesota. 25% comes from the “Ashland” refinery out of South St. Paul, which is now, I believe called “Marathon”. The remaining 25% comes from a refinery outside of Chicago.