Hydrocarbon Processing - July 2022 - 41

100th Anniversary
History of the HPI
LEE NICHOLS, Editor-in-Chief/Associate Publisher
The 1980s: Oil spike/collapse, liquid crystals,
conducting polymers and the rise of AR/VR
Several major impactful events took
place in the global oil and gas and petrochemical
industries in the 1980s. Nations
around the world were hit with another
spike in global oil prices, followed by a
price collapse. This third crisis in 15 yr led
many nations to invest in finding alternative
fuels and/or feedstocks to produce
transportation fuels and petrochemical
products, including the discovery of a new
coal gasification technology for chemicals
production. The discovery of liquid crystals
and conducting polymers not only
created new fields of research, but also advanced
the creation of a new host of electronic
display devices and led to a Nobel
Prize in Chemistry.
The 1980s also witnessed a greater focus
on mitigating vehicle emissions and the
continued phase-out of lead in transportation
fuels. For example, the U.S. Environmental
Protection Agency enacted a new
standard in the mid-1980s to severely limit
lead content in gasoline. The standard,
enacted in 1986, decreased lead content
in gasoline from 1.1 g/gal to 0.1 g/gal.180
U.S. refiners also began to increase the use
of methyl tertiary butyl ether (MTBE)
in gasoline. MTBE was used as a replacement
for tetraethyllead as an anti-knocking
agent (i.e., octane enhancer).
Regions such as Asia and the Middle
East experienced sizable increases in refining
and petrochemicals production capacity
during the decade. For example, the
Middle East's refining capacity increased
from 3.5 MMbpd in 1980 to more than
5.6 MMbpd in 1990.181
Saudi Arabian petrochemical
producer SABIC increased petrochemical
production capacity by more
than 6 MMtpy to 13 MMtpy by 1990 (this
included the launch of several JVs, including
KEMYA, YANPET, PETROKEMYA,
SADAF and SHARQ)-the creation of
SABIC, as well as the construction of AlJubail
and Yanbu industrial cities and the
country's master gas system, would propel
Saudi Arabia to be the leading petrochemical
producer in the region (these events
were detailed in the History of the HPI section
of the June issue). The Asia-Pacific region's
net refining capacity expanded more
than 1 MMbpd to more than 13.6 MMbpd
from 1980-1990 (Japan's refining capacity
declined more than 1.3 MMbpd in the
1980s).181
The region's largest refining capacity
increase occurred in China, which
added nearly 1.2 MMbpd in the 1980s.
China was followed by India, which added
more than 560,000 bpd; Indonesia doubled
domestic refining capacity to nearly
950,000 bpd in the same period.
The decade also witnessed the creation
of three novel heavy-oil upgrading technologies,
the popularization of new digital
technologies that would enhance multiple
facets of the oil and gas and petrochemicals
industries in the future, and notable
industrial accidents and ensuing directives
that led to enhanced safety regulations still
in use today.
A spike, an oil glut and a collapse.
In the 1970s, two major oil crises-the
oil embargo of 1973 and the oil crisis of
1979-significantly affected importing
nations (both crises were detailed in the
History of the HPI section in the June
issue). The oil embargo of 1973 led to
a quadrupling of oil prices globally and
was an impetus for oil importing nations
to intently focus on energy security. The
embargo also led to the creation of the
International Energy Agency in 1974 as a
way for major energy consuming nations
to discuss energy policies and strategize
pathways for the security of supplies.182
The oil crisis of 1979-caused by the
Iranian Revolution, which led to a sizable
increase in global crude oil prices-had
lingering effects into the early 1980s. The
year-long revolution was responsible for
knocking approximately 4.8 MMbpd of
oil production offline. Although this represented
only 7% of the world's oil production
at the time, it led to global oil prices
nearly doubling to $39/bbl (equates to
nearly $140/bbl in today's currency after
adjusting for inflation).140
As oil prices skyrocketed, oil producers
swiftly ramped up production and fought
for market share. Led by OPEC-producing
countries, global crude oil production
reached nearly 64 MMbpd in 1979-1980.
However, a global economic recession
from 1980-1983 led to a steep decline in
oil consumption. Many industrialized nations
(e.g., Canada, Japan, West Germany,
the UK and the U.S.) witnessed high inflation
rates and unemployment during
this period. With oil production having
ramped up over the past few years, the
world was awash in oil, leading to a global
glut that sent oil prices on a freefall.
During this timeframe, newly-elected
U.S. President Ronald Reagan deregulated
the U.S. oil and gas industry through
executive order by removing price controls
on gasoline, propane and U.S.-produced
crude oil.183
Although the policy
helped reduced high pump prices and
put market forces at the helm of crude
oil and products pricing, it removed several
beneficial incentives for smaller U.S.
refiners. According to the U.S. Energy Information
Administration, this led many
small, simple refiners to shut operations.
From 1980-1990, operable refineries in
the U.S. decreased from nearly 320 to just
over 200.183
Most of these closures were
within 2 yr after the decontrol of the U.S.
oil and gas industry. This led the country's
remaining refineries to expand operations
and invest in increasing processing complexity.
Hydrocarbon
Processing | JULY 2022 41
Hydrocarbon Processing - July 2022

Table of Contents for the Digital Edition of Hydrocarbon Processing - July 2022
