Expert reveals how environmental regulations have shut down refineries
June 18, 2022
By Paul Homewood
The excellent Larry Kudlow looks the shortage of refining capacity in the US:
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NOT A LOT OF PEOPLE KNOW THAT 
There is a GREEN war against road fuel over here in the UK as well .
Although the media will not , [ or cannot ] , report it .
The ETS , [ carbon tax , ] which had a huge increase at the start of 2021 has meant that the cost of refining road fuels has put something like 20 to 40 pence on the price of a litre of fuel at the pumps .
The claimed cost of oil , [ which has been a lot higher in the past ,] is only to blame for about a quarter of the price increase which we have seen recently .
But , having learnt from the Yellow Vests in France , there seems to be a deliberate attempt here to hide the fact that green stealth taxes are the main reasons for the massive price rises on road fuels .
Almost certainly to blame for the high prices for electricity , but that is well hidden as well .
Not sure that is correct. Back of envelope: fuel consumption is ~8% of input. UKA carbon tax is about £80/tonne CO2, £294/tonne carbon. So if you assume fuel is almost pure carbon residue that’s about £25.50 per tonne output, or a little over 2ppl, plus VAT as a worst case.
IDAU. Yes it is very difficult to get actual figures , because some refineries use gas for their furnaces , some use oil .
The ETS is paid on the energy used for refining , not for what is produced .
And different grades of crude produce different amounts of petrol/ diesel / lube oils .
So the carbon tax is applied to the energy used for several different outputs .
But , the ETS on electrical generation has about doubled the cost .So a similar process for refining has probably doubled the refining cost , which is between 10 to 20 % of the cost of road fuel at the pumps .
We can do some basic economics: if we value the fuel at 42MJ/kg then that is a consumption of 42×0.08/0.92MJ/kg of products or about 3.6GJ/tonne, which is conveniently 1MWh/tonne. The value of the refinery’s own production of fuel will be lower than the cost of crude: if we take $120/bbl or $900/tonne for crude then the own production fuel cost is less than $72/tonne of products, plus the <£25.50 carbon tax. So if gas costs more that it will pay to use the refinery's own fuel rather than gas. At $1.20=£1, we have <£85.50/MWh as the switching price including carbon tax. If we take methane as 50MJ/kg then we need 72kg of methane to produce 1 MWh, which will produce 44x72x12/16/12 kg of CO2 or 198kg of CO2, which will incur carbon tax of about 0.2x£80/tonne, or £16/tonne. So the gas price needs to be below £70/MWh to make gas the favoured fuel.
In reality, the value of refinery fuel components from streams that don't make good blending components (process gases that require effort to separate, heavy streams that used to go into heavy fuel oil) for mainstream products is substantially lower than the simple cost of crude calculation. While gas would have been the preferred fuel in 2020, today it is almost certainly not, despite the carbon tax.
Not sure where you get your refinery costings from, but they sound on the high side to me. Remember there is a lot of tax in the pump price. If I look at refining margins as reported in the BP statistical review the highest figures in Europe historically have been about $10/bbl which works out as about 5ppl. Costs will be lower than bonanza margins – refineries do make a profit occasionally.
Yes , it is not easy to work out .
If you refer to Pauls Feb 10th article on ETS increases , it shows a tax increase of £32 per MWh for electricity generation ..
Allowing for a CCGT energy efficiency of 53% , and then using 90% energy efficiency for a refineries furnace , [ possible I suppose ,] , you finish up with a figure of about 90p extra tax on a gallon of petrol .
But , looking back , crude oil has been much more expensive in the past with much lower fuels prices . So it is very likely that the large ETS increase is responsible for a lot of the current fuel price .
Refineries are not using electricity for their main fuel: that is always expensive, and reserved for such tasks as powering pumps and lighting. Many generate their own electricity on site from their cheaper refinery fuels and as a byproduct of steam production for pipe and tankage heating and reforming to produce hydrogen, much needed for desulphurisation processes and also for e.g. hydrocrackers: all part of their general fuel consumption. I’ve given you the top whack costs, and demonstrated that the actual costs are much lower.
You appear not to have understood that the £32/MWh figure for UKA tax on CCGT generation Paul quoted is for the electricity output, not the gas input, for which I have supplied a detailed calculation, and which comes out at £16/MWh of gas supplied, in line with a ~50% CCGT plant efficiency. You are obviously making other conversion errors too, though you don’t supply enough detail to pinpoint where they are.
All UK refineries use either oil or gas for their main energy source , and all have CHP units for their own electric use and supply the extra to the grid .
But it is you that do not seem to understand that the ETS “Tax” is paid on the energy that the company uses in its work , not onto what it is producing .
So the £32 per MWh for electric production , , works out as a lot more than your figures to produce oil/ gasoline with the efficiency figures .as quoted .
It is a tax on the energy used , which means that the companies costs are a lot higher just for the same work , and are not linked directly onto each product .
Cooking oil for diesels?
https://www.eta.co.uk/2022/03/18/can-you-run-your-car-on-vegetable-oil/
Not for the modern diesel, my 12-year old Golf, has a big no biodiesel sticker by the fuel cap.
Old diesels, yes. Filter to remove particulates, treat with sodium hydroxide to remove any water & it’d work. Exhaust fumes smell like a chip shop, apparently.
Renewable energy is the gift that keeps giving. Who’d of guessed offshore wind meant more pylons?
https://www.google.com/amp/s/www.norfolklive.co.uk/news/norfolk-news/norfolk-electricity-pylon-plans-controversial-7200376.amp
In the West, all the green ideology (crap) is leading to one of those “tipping points”. We will run out of affordable natural gas, petrol, Diesel, electricity and food.
If (northern hemisphere) winter is severe, then expect civil unrest as the power cuts and food shortages cause hardship and deaths. Unfortunately this pain will have to be endured to show the green wet dreams are just not practical. Those of us in the know, need to stock up on dry food, make sure the generator works and we have fuel and invest in a wood burner.
“…the green wet dreams are just not practical.”
Not necessary either. Most of the problems that they are trying to solve are entirely imaginary.
In a faux democracy the only recourse is to arms as voting is pointless when it has no power to change anything. There are only 2 sides – them and us. It is laughable to think that the Labour Party is the party of the working class when those people, if such a thing still exists now that we have no major industries, have views that Labour consider ‘far right’. Labour are just the same as the Tories. Load and lock, and get on with it!
Just as an aside, I have a small (150W) inverter that plugs into a 12V car “cigarette lighter*” output to run things like laptops etc. I checked out my combi boiler specifications (Worcester Greenstar 42) and its max electrical power draw was rated at 135W…so I thought I would give it a shot. Plugged in an extension lead from the inverter in the car to the boiler, plugged it in and hey presto it ran perfectly (the programmer is battery operated). Probably a good standby idea for some of those without standard generators.
*also known as “cigar lighters” on posher cars!
uk.rs-online.com/web/p/power-inverters/8160015?c
Ray; thanks very much for that link.
I have been pondering the options for backing up my boiler, circulating pump and controls: one of those RS inverters would be useful (in a slightly greater capacity).
My simplistic concept is to have a gutsy lead-acid battery to feed an inverter with a trickle charger to keep it topped up. I just need to find someone who understands electrickery to sort out switches, etc..
In response to Mikehig, the best battery would be termed a deep cycle battery. These can be discharged to a lower extent but cannot deliver the high power that a car (cranking) battery does. They are often termed “leisure” or “recreational” batteries. A 130ah 12V battery can theoretically store 1.5kWh but in reality you are only likely to get a maximum of 750Wh out from it safely.
This is a good example https://www.ebay.co.uk/itm/114860697649?mkevt=1&mkcid=1&mkrid=710-53481-19255-0&campid=5338533988&customid=114860697649_1&toolid=11000
Most central heating circulating pumps are only about 100W and a gas fired heat only boiler (rather than a combi) only needs power for fan and electrical controls so not a great deal and could probably be handled by inverter I mentioned. The battery above would be good for 5 hours continuous heating running. So an emergency hour in the morning and evening with the boiler turned up very hot should see most through a couple of days.
It quite possibly would be a sensible low cost precaution for many to consider and preferable to freezing to death because of absurd “Net Zero” policies.
Ray S; Thanks again for more helpful advice – I wasn’t aware of “deep cycle” batteries.
Hopefully I will sort out a low-cost system based on your info. I really think it will come in useful before too long.
Disagree on what’s in short supply. It’s not refineries, wells, etc. Critical shortage is people having critical thinking skills, and understanding basic science, math, economics, etc. Then electing representatives who understand these as well and not being seduced by ‘freebies’.
What good is a “green” environment when nobody can afford to live in it? Except only those uber wealthy investors in this scheme, especially when they cover their risks by forcing us to pay for it!