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I. Oil reserves
The United States is one of the countries with the largest proven oil reserves in the world. As of January 1, 2004, its proven oil reserves were 22.7 billion barrels, ranking 11th in the world. More than 80% of the country’s reserves are concentrated in four States in the United States: Texas (24%), Alaska (22%), Louisiana (20%) and California (19%). Other oil-producing states include New Mexico, Oklahoma, Wyoming, Kansas, Mississippi and North Dakota. Due to the over-exploitation in the late 1980s and the first half of 1990s, the oil reserves in the United States decreased rapidly. At present, the oil reserves in the United States decreased by about 20% compared with 1990.
Second, production
The United States is the third largest oil producer in the world after Saudi Arabia and the Russian Federation. According to the statistics of American oil and gas magazine, the American oil output in 2003 was 7.9 million barrels per day, accounting for 9.2% of the world’s total oil output. The output of crude oil is 5.7 million barrels per day, and the rest is natural gas liquid (NGL). At present, the output is the lowest in the past 50 years, which is about 25% lower than the 10.6 million barrels per day in 1985. There are about 500,000 oil producing wells in the United States, but most of them belong to marginal wells. According to statistics in 2003, the main oil producing areas are concentrated in the Gulf of Mexico, Texas land oil fields, the northern slope of Alaska, California, Louisiana land oil fields, Oklahoma and Wyoming. In 2003, the United States drilled 30,151 new oil and gas wells, including 5,694 oil wells, 20,011 natural gas wells and 4,446 dry wells. Compared with 25,536 wells drilled in 2002, it increased by 18%. With the progress and development of geophysical prospecting technology and drilling equipment, the output of deepwater oil fields in the Gulf of Mexico has increased rapidly. At present, the output of deepwater oil fields accounts for two-thirds of the oil production in the Gulf of Mexico in the United States. Because most of the energy resources in the United States are concentrated in the territory of the federal government, and the exploration and exploitation of oil and gas are subject to many restrictions by the federal government, it is difficult to increase oil production significantly. Due to the low return on energy investment, the investment in the oil industry has been greatly reduced since 1980, which has led to the aging of the existing oil supply infrastructure in the United States, such as pipeline transportation and refinery processing, and the serious shortage of production capacity.At the same time, domestic production costs are higher than the international level, and environmental protection requirements are increasingly demanding. As a result, many refineries have been forced to close down. Relevant data show that no new refinery was built in the United States from the late 1980s to the 1990s. The petroleum refining and processing industries in the United States are mainly concentrated in Texas, Louisiana, California, Illinois, Pennsylvania, New Jersey, Washington, Ohio and Indiana. According to the statistics of British Petroleum Company (BP), the refining capacity of the United States in 2002 was 16.76 million barrels per day, accounting for about 20% of the world’s total refining capacity of 8,390 barrels per day. At present, the dominant oil companies in the American market are mainly ExxonMobil, Philips Continental, Chevron Texaco, Shell Oil, Frontier Oil, Marathon Oil and other companies. The U.S. Department of Energy predicted in its energy policy article that the oil production in the United States will drop from the current level of 580 barrels per day to 5.1 million barrels per day in 2020, and the Gulf of Mexico will play an important role in the future, and its share in domestic oil production will increase from the current 27% to 40% in 2010.
Third, consumption
The United States is the largest oil consumer in the world. In 2003, the consumption was 20.071 million barrels per day (equivalent to 914.3 million tons), an increase of 1.9% over the previous year, accounting for 25.1% of the total oil consumption in the world. In the current composition of energy consumption in the United States, oil accounts for 42%, coal accounts for 24%, natural gas accounts for 20%, nuclear energy accounts for 8-,and hydropower, solar energy and wind energy account for 4%. According to the statistics of British Petroleum Company (BP), in the composition of oil consumption in the United States in 2003, transportation oil accounted for about 67.5% of the total oil consumption, industrial oil accounted for about 24.2%, civil oil accounted for about 3.9%, electric oil accounted for about 2.4%, and commercial oil accounted for about 1.9%. After experiencing the oil crisis in the 1970s, the United States began to pay attention to improving energy utilization and saving energy, and the energy intensity continued to decline. At the end of 1990s, the energy required for producing every dollar decreased by 44% compared with that in 1970, and the annual per capita oil consumption decreased from 31 barrels in 1978 to 26 barrels in 2000, a decrease of 20%. On the whole, since 1973, American economy has increased by 126%, while energy consumption has only increased by 30%.
In order to improve the energy utilization rate, the federal government formulated the Energy Star program as early as the 1970s, and in the late 1980s, it set energy-saving standards for related industries, such as automobile manufacturing, household appliances and building lighting. Some energy-intensive production units, such as wood processing and papermaking, chemical industry, petrochemical refinery, metal smelting, food processing, ceramics and glass firing, have either adopted new energy-saving technologies or shut down and turned around, reducing the dependence of the economy on energy to some extent. In addition, the adjustment of macroeconomic structure and the rise of non-energy-intensive industries, such as communication and information technology, microelectronics and financial services, have also greatly reduced the energy intensity of the United States.
On the other hand, because the transportation industry in the United States accounts for more than 65% of its total oil consumption, the automobile industry in the United States developed rapidly during the period of low oil prices in the 1980s and 1990s, and the vehicle types became larger and larger, especially the fuel-intensive vehicles such as off-road vehicles and sports cars, which were favored by consumers. Therefore, the demand for petroleum products, mainly gasoline, has greatly increased. The US Department of Energy predicts that in the next 20 years, US oil consumption will increase by 33% and natural gas consumption by 50%, and by 2020, US oil consumption will reach 26-27 million barrels per day.
Iv. import
The United States has been a net energy importer since 1950s. After 1985, its dependence on imported oil increased significantly. In 2003, its import volume increased from 4.3 million barrels per day in the mid-1980s to 12.2 million barrels per day (equivalent to 605.1 million tons), an increase of 7.9% over the previous year, accounting for 62% of its total domestic oil demand and 26.8% of the world’s total imports. Among them, the import volume of crude oil is 9.645 million barrels per day and that of oil products is 2.609 million barrels per day. The main import sources are Canada (2.1 million barrels per day), Saudi Arabia (1.8 million barrels per day), Mexico (1.6 million barrels per day) and Venezuela (1.4 million barrels per day). Among the sources of oil imports in the United States, more than two-fifths of oil imports come from member countries of the Organization of Petroleum Exporting Countries. From 1973 to 2000, the dependence of American domestic market on imported oil increased from 35% to 52%, natural gas increased from 5% to 15%, and the proportion of energy imports in its total imports exceeded 10%. In order to meet the increasing domestic oil demand and ensure the safety of energy supply, the United States has formulated a multi-faceted global supply system strategy in its energy policy and implemented a diversified policy of oil and gas import sources. In addition to taking Saudi Arabia, Kuwait and other oil-producing countries in the Middle East as the leading sources of supply, it also makes full use of the convenience of the North American Free Trade Area to consolidate the existing energy production and cooperation with Canada and Mexico.Increase investment in onshore and offshore oil and gas fields in Latin America and Central and South America countries such as Venezuela, Trinidad and Tobago, Bolivia, Brazil, Argentina, Chile, Paraguay, Uruguay, Colombia, etc., and ensure the source of oil supply for the United States in this region. And set up the US-Russia oil and gas working group and the US-Kazakhstan oil and gas and commercial energy working group, increase investment in Aegean and African countries and regions, and make use of technological advantages to carry out deep-sea oil and gas exploration and production in the Atlantic basin between Canada and the Caribbean, Brazil and West Africa.
V. Inventory
Strategic reserve oil
After being hit by the oil embargo imposed by the oil-producing countries in East Arab in the early 1970s, President Carter signed the energy policy and energy-saving law in 1975 and decided to establish a strategic oil reserve. On July 21, 1977, about 412,000 barrels of Saudi light crude oil were injected into the salt cave on the coast of the Gulf of Mexico as the first strategic storage. According to the relevant laws, only when the domestic energy supply or import is blocked, or the oil price rises sharply due to the oil embargo, which may seriously threaten national security or economic operation, can the President of the United States decide and order the use of strategic reserve oil. On November 13, 2001, President George W. Bush announced that the strategic oil reserve would be increased to 700 million barrels. At present, the strategic oil storage capacity of the United States is 727 million barrels. The International Energy Agency requires that the United States’ oil reserves (strategic and non-strategic stocks) should reach 90 days’ import. The maximum withdrawal amount of strategic oil reserves is 4.3 million tons/day, and it takes about 13 days from the withdrawal of stocks to entering the US market. In order to establish strategic oil reserves, the United States has invested a total of 21 billion US dollars, of which 4 billion US dollars are used to purchase oil storage facilities and 17 billion US dollars to purchase reserve oil. The reserve oil will come from 20 countries, of which light crude oil accounts for about one-third of the total reserve oil and two-thirds is heavy crude oil (crude oil with sulfur content above 2%). As of August 24, 2004, the United States had 667 million barrels of strategic reserve oil, which was equivalent to 55 days’ import at that time. Among them, 270 million barrels of light crude oil and 397 million barrels of heavy oil.(In 1985, the strategic stock oil reached the import volume equivalent to 118 days at that time). The main oil storage locations are related states in South America, such as Louisiana and Texas, which are close to the Gulf of Mexico. The strategic reserve oil of the United States has played an important role in stabilizing the international oil market. Since the establishment of the strategic oil reserve, only when Iraq attacked Kuwait in early 1991 and caused the price of the international oil market to rise sharply, according to the allocation quota of the international energy agency, President Bush ordered the Ministry of Energy to use 33.75 million barrels of crude oil when launching the operation desert storm to calm the price rise in the oil market. But in the end, the United States only used 17.3 million barrels, which effectively brought the international oil price down sharply.
Commercial petroleum inventory
According to api gravity data, by the end of July, 2004, the commercial inventory of crude oil in the United States was 298 million barrels, up by 4.6% over the same period of last year, the inventory of gasoline was 212 million barrels, up by 5.2%, and the inventory of other oil products was 158 million barrels. At the end of July, the national inventory of various oil products (excluding strategic oil reserves) was 959.6 million barrels, a slight increase of 0.2% over a year ago.
VI. The Impact of Oil Price Fluctuation on American Economy
Since 2003, especially since August this year, the sharp and rapid rise in oil prices has caused the international oil market to fall into panic again. The New York Mercantile Exchange’s September West Texas Intermediate crude oil futures price broke through the psychological defense line of $40 and $45 per barrel in just a few weeks, and reached the $50 mark. Finally, on August 20, it fell back after hitting $49.40. Compared with the beginning of the year, oil prices have increased by about 50%.
People in the industry have consistent views on the reasons for the rising oil prices, mainly as follows: 1. Compared with other commodities, the monopoly of oil is still strong. In order to maintain the selling price, the Organization of Petroleum Exporting Countries has been adopting the sales strategy of limiting production and insuring prices in recent years, but the supply has decreased. 2. The international market demand shows a slow growth trend, and the oil import demand of emerging countries, especially China and Indian countries, rises sharply. 3. The geopolitical situation is turbulent, and anti-government forces in Iraq threaten to blow up oil production facilities, kidnap foreign companies as hostages and carry out terrorist activities. The political turmoil caused by Venezuela’s domestic election has affected its oil production and export, and the protracted tax evasion case by KOS Oil Company in Russia has caused market panic. 4. Speculation in the oil futures market has intensified. As soon as traders encounter trouble, they will take the opportunity to speculate, which will contribute to the rise and fall of oil prices. 5. The production capacity of the member countries of the Organization of Petroleum Exporting Countries is close to the limit, and their ability to regulate oil supply is declining.
As for the possible impact of this oil price on the economy, there are different opinions. As the impact of oil price fluctuation on economy is lagging behind, judging from several oil crises since 1970s, every crisis is always accompanied by high inflation and economic recession. For example, the first oil crisis when the Arab countries imposed an oil embargo led to a serious global recession in 1973-1975, the oil crisis triggered by the Iran-Iraq war in 1979 led to a global recession in 1981-1982, and the oil price shock triggered by the Gulf War plunged the western industrialized countries into a relatively moderate economic recession in 1990-1991. Therefore, some economists believe that this sharp rise in oil prices will inevitably bring considerable negative impact to the world economy. Take the United States as an example. In 2004, its GDP increased by 4.5% in the first quarter, and decreased to 3% in the second quarter. Affected by the oil price shock, many American economists have lowered their economic growth forecasts in the second half of the year, arguing that high oil prices will affect consumer spending, reduce investment, reduce national real income, keep the unemployment rate high, widen the foreign trade deficit, and may lead to inflation. What’s more, it is believed that the American economy may experience stagflation or fall into recession again in 2005. However, some institutions, such as the Federal Reserve Board of the United States, are optimistic that the impact of this oil price shock on the US economy is limited, and it will not lead to a new economic crisis. The reason is that from a macro perspective, there has been no fundamental change in the relationship between supply and demand in the international oil market.The oil supply is sufficient, the demand for oil in the United States has not increased significantly, and it is backed by a considerable oil inventory. More importantly, the tolerance for rising oil prices is greatly enhanced compared with the past, so it can cope with price fluctuations in the international oil market in a short period of time. Once speculation subsides, the oil market will return to its original pattern.
The author believes that oil is a strategic scarce resource. Although major oil importing countries have been practicing energy conservation and improving energy utilization for a long time, the status of oil as a major energy source cannot be effectively replaced for a long time to come. With the continuous development of the world economy, especially the rapid economic development of developing countries such as China and India, the demand for oil in the international market is bound to increase. At the same time, the international geopolitical pattern is turbulent, especially the terrorist activities in major oil-producing countries such as the Middle East, which will always be an unstable link in the supply chain of the international oil market. Therefore, in the long run, oil prices will continue to rise with the increase in demand caused by the development of the world economy. The possibility of a sharp rise in oil prices in the short term due to temporary factors and speculation is not ruled out. From the perspective of the United States, as it experienced the oil crisis in the 1970s, it adjusted its macro-energy policy in time, paid attention to the diversification of energy composition, increased the development of natural gas resources, nuclear energy and other alternative energy sources, improved energy utilization rate and focused on energy conservation, diversified import channels, and a huge strategic oil reserve, so its overall resilience to resist the energy shortage crisis was greatly enhanced compared with the past, and short-term oil price fluctuations had relatively little impact on the economy. Therefore, although this oil price shock will definitely affect its economic growth in the second half of 2004, it is estimated that it will not have a reversible impact on its economic activities, and the specific impact will need further close attention.
According to the statistics of the U.S. Department of Energy, 48% of the total crude oil consumed in the United States is used to produce gasoline and other fuels. Due to the popularity of multi-purpose vehicles with high horsepower and high fuel consumption, the consumption of gasoline in the United States has increased by 24% since 1990. Since September and November, especially since this year, due to the intensified price fluctuation in the international primary raw material market and domestic natural disasters, especially the hurricane that frequently visited the relevant States in the southern United States last year and this year (which is also the gathering place of many large American oil refineries), the domestic petroleum products in the United States, such as gasoline and heating oil, have shown a tight supply market situation, which has led to. It is estimated that gasoline consumption will increase by 48% over the current level in 2025. Because domestic production is far from meeting the market demand, the proportion of imported gasoline in the total gasoline consumption in the United States has soared from 4% in 1995 to about 10% at present. According to the forecast of the Energy Information Administration, by 2025, the gasoline consumption in the United States will increase from the current 8.9 million barrels per day to 13.3 million barrels per day. By then, gasoline alone will account for half of the crude oil consumption in the United States. At the same time, the proportion of diesel oil, heating oil and aviation fuel oil in the demand for refined oil will also increase greatly. In sharp contrast, since the second half of the 1990s, the domestic refining capacity in the United States has increased by less than 1%.
The main reasons for the imbalance between supply and demand in the oil market are:
Since the 1970s, due to the persistent surplus of international crude oil market, oil prices have been hovering at a low price for a long time. At this stage, American refineries have maintained a low rate of return and a low rate of return on investment, which greatly inhibited investors from expanding refinery facilities and launching new refineries. In fact, since 1976, the United States has not built a new refinery (just increasing the production scale of existing facilities). At present, the number of oil refineries has decreased by more than half compared with 1981, while gasoline consumption has increased by 45%. According to the statistics of the relevant departments of the US Department of Energy, the number of refineries in the United States has decreased from 324 in 1981 to 148 (including 4 idle ones). These refineries are located in 32 States in the United States, with an overall crude oil processing capacity of 17.12 million barrels per day. In the past ten years, nearly 50 refineries have closed down, and most of the existing enterprises have outdated equipment and various accidents. The reason is mainly attributed to the large-scale reorganization of oil refining enterprises after the two oil crises in the 1970s, such as selling and closing excess production equipment, which led to the reduction of the number of refineries in this industry. In addition to the overcapacity factors that affected the new investment in the oil refining industry in the 1980s and 1990s, various regulations in the United States, such as more stringent environmental laws, clean air laws, relevant regulations on air quality, water quality, waste and automobile exhaust emissions, more additional government licenses and regulations to further reduce the sulfur content in gasoline and diesel, in addition,Refineries also need to produce gasoline and diesel with different standards according to federal standards, state government standards and local government standards, and it takes time to apply for more complicated government licenses. Clean fuel standards (such as the introduction of various environmental protection standards one after another, the increasingly strict emission standards for automobile exhaust, etc.) undoubtedly make refinery production more difficult and new capital investment increase. According to statistics from the United States, in the past 10 years, the refining industry in the United States has invested about $47 billion in environmental protection projects, mainly for producing low-sulfur unleaded gasoline that is more conducive to environmental protection. Under the restriction of internal and external environment, many oil refining enterprises have high input and low output, while some refineries are forced to close down because they cannot adapt to the increasingly fierce industry competition.
List of refinery distribution and crude oil processing capacity in the United States
Number of refineries by state, among which idle number crude oil processing capacity
Idle processing capacity (barrel/day)
Delaware 1 175000
Georgia 1 1 28000 28000
New Jersey 6 1 666000 51000
Pennsylvania 5,770,000
Virginia 1 58600
West Virginia 1 19400
Illinois 4 896000
Indiana 2 433000
Kansas 3 296200
Kentucky 2 227500
Michigan 1 74000
Minnesota 2 335000
North Dakota 1 58000
Ohio 4 551400
Oklahoma 5 484961
Tennessee 1,180,000
Wisconsin 1 33000
Alabama 3 1 130200 16700
Arkansas 2 76800
Louisiana 17 2772723
Mississippi 4 364800
New Mexico 3 112600
Texas 26 1 4628491 880
Colorado 2 87000
Montana 4 181200
Utah 5 167350
Wyoming 5,152,000
Alaska 6 373500
California 21 2026788
Hawaii 2 147500
Nevada 1 1707
Oregon 1 0
Washington 5 616150
The United States totals 148 4 17124870 118580.
Puerto Rico 2 1 109500 42000
Virgin Islands 1,495,000
As can be seen from the above table, refineries in the United States are mainly concentrated in Texas, California and Louisiana. The above three States account for 43.2% of the total number of refineries in the United States, and the crude oil refining capacity accounts for 55.1% of the United States. Texas alone accounts for 17.6% and 27.0% of the total in the United States.
Geographically, refineries in the United States are mainly concentrated in Texas and Louisiana near the Gulf of Mexico in the southern United States.
About 25% of the existing refinery production capacity in the United States is controlled by foreign enterprises. Mainly operated by large petrochemical multinational companies, such as BP, Shell Chemical Company, Dow Chemical Company, ExxonMobil Company, Texaco Company, Continental Philips Company, Chevron Company, Marathon Schlander Company, Citgo Petroleum Corp., Motiva Enterprises LLC, Murphy Oil USA Inc., Valero, Total Petrochemical Inc.,
Western refining co., chalmette refining LLC., premcor refining group Inc., etc.
Since the beginning of the 21st century, due to the turbulent world political situation and increasing demand, the price of international crude oil market has been rising, which has led to an increase in market demand for oil products. Although refineries are operating at full capacity, the demand is still in short supply. At the same time, due to the aging equipment of many refineries, accidents continue (for example, BP’s refinery in Texas suffered two accidents, including the explosion in the first half of 2005, which caused dozens of casualties and heavy losses), and the shutdown of refineries along the Mexican coast caused by two hurricanes in August and September 2005, as well as speculation in the international oil futures market, which further aggravated the shortage of oil products in the US oil market, and the prices of motor gasoline and diesel oil soared.
The Impact of Hurricane Katrina and Rita on American Petroleum Refining Industry
In late August and late September, 2005, two successive hurricanes Katrina and Rita swept through the Gulf of Mexico, which not only brought serious casualties and huge property losses to Louisiana and eastern Texas, but also caused heavy losses to the oil refining industry in the United States.
According to the statistics of the US Department of Energy, the oil production in the Gulf of Mexico is 1.5 million barrels per day (equivalent to 75 million tons), which is one of the important oil producing areas in the United States. There are dozens of large refineries of multinational oil companies in Texas, Louisiana and Mississippi near the Gulf of Mexico. For example, there are 17 refineries along the Mexican coast in Texas, including 10 refineries in Houston, with a daily refining capacity of 2.3 million barrels of crude oil, accounting for 13% of the total refining capacity in the United States. There are four refineries in Beaumont and port arthur, with a daily processing capacity of 1.1 million barrels of crude oil, accounting for 7% of the total refining capacity in the United States. Exxon Mobil (ExxonMobil) has 348,500 barrels per day, Motiva (Shell) has 285,000 barrels per day, Total has 233,500 barrels per day, and Valero has 255,000 barrels per day (according to the statistics of the US Department of Energy on January 1, 2005). There are three refineries in Christie, Kobos, with a daily processing capacity of 586,000 barrels of crude oil, accounting for 3% of the total refining capacity in the United States. The three refineries in Lake Charles, Louisiana, which were severely hit by this hurricane, were completely shut down. They were Citgo, with a refining capacity of 324,300 barrels per day, ConocoPhillips, 239,400 barrels per day and Calcasleu, with a refining capacity of 30,000 barrels per day.
Affected by the hurricane, the production capacity of about 3.5 million barrels per day (equivalent to 20% of the country’s total refining capacity) was temporarily closed. Among them, the refineries in Port Arthur in eastern Texas and Lake Charles in Louisiana suffered from wind disaster or power failure, and the refining capacity of 1.7 million barrels of crude oil per day completely stopped (accounting for about 10% of the national total refining capacity). And thus triggered a sharp rise in the retail price of gasoline in the southern region.
Crude oil production and refinery processing capacity in the Gulf of Mexico in the United States
(Figures as of August 2005)
Proven reserves of Zhoubie crude oil
(Million barrels) Ranks crude oil output in the United States.
(1,000 barrels per day) Ranks the number of refineries in the United States and ranks the processing capacity of refineries in the United States.
(million barrels) market share in the United States
USA 148 1712.49
Texas 4583 2 1073 2 26 1 4.6 26
Louisiana 452 8 228 5 17 2.8
Alabama 52 19 20 16 3 0.114
Mississippi 169 14 47 13 4 0.365
Georgia nothing 1 0.028
Florida 68 17 8 20 0 0
Oklahoma 588 6 171 7 5 0.485
Arkansas 50 20 18 17 2 0.077
Subtotal 5962 1565 58.469
Source: Energy Information Administration of the US Department of Energy, Census Bureau and National Petroleum News "Market Information in 2004".
As can be seen from the data in the above table, the Gulf of Mexico in South America occupies a considerable share in the US energy market in terms of crude oil production, refinery quantity and processing capacity, and also has a certain impact on domestic and even international oil prices.
After learning from a painful experience, the US government decided to review the existing oil refining industry mechanism in the United States to find out whether there is monopoly and price manipulation in the industry after consumers were hit by the recent sharp rise in oil prices and complained. To this end, the CEOs of Exxon Oil Company, Shell Oil Company, BP America Company, Continental Oil Company and Chevron Company, which account for 42% of the national oil refining capacity, were invited to attend the Senate hearing to explain why they made profits as high as $32.8 billion in a quarter from June to September 2005.
In order to cope with the increasing demand for oil products and reduce price fluctuations, members of the Senate and House of Representatives of the United States have proposed new refinery expansion bills, and some have proposed to build new refineries in areas where the unemployment rate is 20% higher than the national average. This will not only achieve the purpose of building refineries, but also increase employment. Some suggest giving preferential tax treatment or tax exemption to attract investors, and some suggest using abandoned military bases as the site of new refineries, which can cause less opposition from nearby residents. However, judging from the current actual situation, a substantial increase in the supply of domestic oil products in the United States can not be achieved overnight. Although the oil supply can be increased to a certain extent by restructuring the refining industry again, combining and expanding existing refineries, improving production processes and processes, even those refineries that have not yet reached full production are limited in their production capacity. The fundamental way to solve the problem is to build a new refinery, but it is expected to face great resistance. The first is the site selection. Many people will agree to build the refinery, a potential pollution source and a "time bomb", in their own backyard. Secondly, it is complicated and time-consuming to apply for relevant permits and obtain approval from competent authorities at all levels. The most important thing is to build a new refinery with large investment, low average profit level and long payback period. The investment in building a new refinery is usually as high as several billion dollars, and even a small refinery needs about one billion dollars.However, the sharp fluctuation of the international oil market price has increased many uncertainties in predicting the investment recovery period and return rate of refineries, which has inhibited the investment desire of potential investors. There is also a recognized view that due to the continuous integration and merger of the oil industry in the past few decades, most small companies with little capital and weak technical strength have been washed out or merged. At present, most of the companies operating in the market are multinational companies, and the market participants in this industry are relatively few, and the competition is not as fierce as other industries. In other words, the monopoly is strong. The rise in oil prices has been expected by these companies for many years, so they will never give up this opportunity to make a lot of money. Building a new refinery will undoubtedly increase competitors and reduce the average profit rate, so there is little interest in these current vested companies.
Editor: Wang Yuxi