In an earlier blog post in January, "Guess What, We're Being Swindled" I wrote about the differential between the prices of diesel and petrol.
Brian Madderson, Chairman of RMI Petrol which represents independent petrol retailers and forecourt operators, said at the time "Demand for diesel has been growing steadily in the UK but our refineries haven't. We used to have 19 refineries but now have only 8. What's more, they are old and not terribly efficient. So we have to compete for diesel on the international market - and ultimately pay through the nose for it."
And yet, in today's news, it was announced that the refinery at Coryton in Essex is being denied state aid by the Department for Energy and Climate Change on the basis that since there was an overcapacity in the refining industry and a declining demand for petrol, it would be unsustainable for the Government to provide assistance even if the EU allowed it to do so. link
I was confused by this statement. In January we were paying more for diesel because as a nation we were under capacity for refining, yet by June we are now over capacity. Something doesn't add up here. Perhaps, I thought, Coryton only produces petrol, and that we might actually be over capacity for petrol and under capacity for diesel.
So I checked. Actually, it produces both. According to the Coryton page on the UKpia website, this refinery has an output of 10 million tonnes per year. Of that, 36% is petrol, and 27% is diesel. So the diesel capacity is approximately 2.7 million tonnes per year.
Two things bother me about this. Firstly, we were told that we were under capacity for diesel to justify high prices, yet when it comes to saving the plant (and the jobs) suddenly we're over capacity. Secondly, even with the diesel being produced there, if we were under capacity before, we will be 2.7 million tonnes more under capacity from now on. If the price differential is because of the capacity shortage, diesel prices are set to go up even further as the international markets realise we have less of our own diesel.
Something about this whole issue does not add up. At least one of the parties involved has to be wrong. Whoever this is, it can only mean this: higher diesel prices, higher inflation, higher food prices and 850 jobs lost in Essex, with the knock on effects to that local economy.
Can the Government really not justify investment in modernisation of Coryton, for the short term and long term benefits which are surely obvious?
Something doesn't add up alright - unfortunately it's George Osborne, the Chancellor.
ReplyDeleteI too recall when fuel prices hit a high earlier this year and last, and crude production was increased to damp it down I recall the "lack of capacity at the refineries" malarkey being used to justify the retail price remaining high.
That's why it was a kick in the arse to see Camoron go to meet with the gas companies and, rather than go with the advice given to Labour a couple of winters ago (which they themselves didn't follow) - make them increase storage capacity so companies can buy gas in the summer when it's cheap and sell it in the winter when demand is high, he came out and said Britain, you're on your own. We should've known that though.
Remploy is another example - the govt want to close it and either stop the people who work there "sitting round drinking coffee all day" to quote Iain Duncan Smith, or stop them being hidden away in factories, also according to Iain Duncan Smith. Do we want manufacturing as a way out of debt or not? Does every little help? Are jobs two-a-penny for the able-bodied right now? And if Remploy is so uneconomical why has the govt had more than 40 bids to run it? The whisper of £10 million in subsidies for anyone willing to take it on makes you wonder too..
D McE
A few points from someone who works there:
ReplyDelete" it would be unsustainable for the Government to provide assistance", in March the Energy Minister met Coryton management and representatives from the industry where it was stated that Coryton was the ONLY refinery in the UK making money!
At a further meeting with the minister on 19th June he stated to the union and to management that he was very sorry but they had analysed the situation and as a country we make too much petrol and not enough diesel, as you are a petrol refinery we don’t need you. When it was pointed out that we do actually make a lot of diesel and will make even more after the changes planned in the upcoming refit he looked quite shocked and exclaimed "DO YOU!".
They obviously could not have done a very comprehensive analysis of the impact on the energy needs of the country if they didn't even know what Coryton produces.
The whole thing stinks of corruption and backhanders.
According to the local (Tory) MP in a speech to the house:
The highest bid appears to be the Russians, but there was a communications breakdown!
Both sides in the bid were represented by PWC!
The actual cost to the economy could be up to £1Billion!!!!!
DDD