Mini-Rumination: Oil Companies Can be Dumb, Too

Most of us have oil companies pegged as essentially greedy and evil, but now comes evidence that they can be pretty dumb, too.

Sunoco is an oil company that’s been around since 1886.  Its founders included a member of the Pew family – you know, Pew as in the Pew Charitable Trusts, one of the most important philanthropic foundations in the country.  Over the years the company has explored and drilled for oil, refined oil, and sold oil on a retail basis at thousands of gasoline stations.  It also operates nasty little convenience stores as appendages to many of its gas stations because, you know, greedy companies never want to pass up an opportunity to separate people from more of their money by selling them quality products like cigarettes.

But Sunoco is apparently falling on hard times and is closing a major refinery outside Philadelphia.  According to the company, as reported by the Philadelphia Inquirer, Sunoco says it has lost $1 billion over the last three years in its oil refining business.

Let’s take a closer look at the environment in which Sunoco is closing its refinery:  demand for oil remains strong, prices are through-the-roof high, and we keep hearing (okay, mostly from congressional Republicans, so we need to take this with a grain of salt) about how lack of refining capacity is what’s keeping gasoline prices so high.  Yet here we have a company that, despite strong demand and record-high gasoline prices, has managed to lose $1 billion in the past three years refining oil.

This raises an obvious question:  How incompetent do you have to be to lose a billion dollars refining oil in the current environment?

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