Hydrocarbon Processing - September 2022 - 91

100th Anniversary
History of the HPI
LEE NICHOLS, VP, Content/Editor-in-Chief
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 Al-Jubail 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 1970s history section).
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
1970s history section). 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 OPECproducing
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 reduce 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
Hydrocarbon Processing's Centennial Anniversary | SEPTEMBER 2022 91
Hydrocarbon Processing - September 2022

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