Energy Shortages, Inflation the New Norm?

Ron Stein is an engineer who, drawing upon 25 years of project management and business development experience, launched PTS Advance in 1995. He is an author, engineer and energy expert who writes frequently on issues of energy and economics.

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With worldwide refinery closures outpacing new construction, shortages and inflation are likely to be the new norm that inflicts regressive expenses upon those that can least afford it, as control of the worldwide refining industry shifts to Asia and Europe.

As the world has become impassioned with increasing its electricity generation from wind turbines and solar panels from breezes and sunshine, the world is silently slipping into a future of shortages and inflation as society’s demands for all the products and fuels manufactured from crude oil is exceeding the supply available from the dwindling number of refineries.

There were almost 700 oil refineries in the world as of January 2020, but as a result on continuous over regulations, permitting delays, aging equipment and the worldwide support of the Environmental, Social, and Governance (ESG) to divest in fossil fuels, the right operating model and level of integration will be crucial for survival and sustained profitability of refineries.

In 2019 there were 135 refineries in the US but five facilities were shuttered during the last two years.

Each refinery location is a business that needs to make business decisions. Consequently, one in five oil refineries are expected to cease operations over the next five years. One in five is 20 per cent or almost 140 refineries expected to be shuttered worldwide, resulting in a 20 per cent decline in the products manufactured to meet the ever-increasing demands form society.

There are over 100 new refineries under construction, with most of them in Asia (88), Europe (12) and North America (10). Asia is the region with the greatest number of future petroleum refineries. As of 2021, there were 88 new facilities in planning or under construction in Asia. […] The amount of oil fed through refineries in Asia has significantly increased in the past three decades as demand for petroleum products surged in developing countries such as China and India. China is on track to succeed the United States as the country with the greatest oil refinery throughput.

While worldwide demand for the products made with oil derivatives and fuels manufactured at refineries continues to increase, the upcoming closures of manufacturers over the next five years will significantly reduce the supply of those items and place tremendous pressures on continuous shortages and inflation.

Renewables can only generate electricity, and intermittent electricity at best. The indisputable science is that renewables CANNOT manufacture any of the oil derivatives that are the basis of the thousands of products that are the foundation of societies and economies around the world. In fact, renewables cannot exist without crude oil, as all the parts of wind turbines and solar panels are made with oil derivatives manufactured from crude oil.

Here is a reminder of what is manufactured from oil that did not exist before 1900 that are needed to support the growing demands of the world’s economy and for the health and well-being of the world’s eight billion residents:

Fuels for the:

• 50,000 heavy-weight and long-range merchant ships that are moving products throughout the world.
• 50,000 heavy-weight and long-range jets used by commercial airlines, private usage and the military.
• The 290 million registered vehicles in the US as of 2021, that were comprised of about 56 per cent trucks, 40 per cent cars and four per cent motorcycles.
• The cruise ships that now move 25 million passengers around the world.
• The space program.

Oil derivatives to make thousands of products such as:

• Tires for the billions of vehicles.
• Asphalt for the millions of miles of roadways.
• Medications and medical equipment.
• Vaccines.
• Communications systems, including cell phones, computers, iPhones and iPads.
• Water-filtration systems.
• Sanitation systems.
• Fertilizers that come from natural gas to help feed billions.
• Pesticides to control locusts and other pests.
• Wind turbines and solar panels as they are all made with products from fossil fuels.

With worldwide refinery closures outpacing new construction, shortages and inflation are likely to be the new norm that inflict regressive expenses upon those that can least afford it.

This article originally appeared at Heartland.