Quote:
Originally Posted by R Leo
It has nothing to do with "peak oil" or any other doomsday scenario. The global economy is currently in a cooling-off period and hydrocarbon production follows the economy. In short, it's all based on demand and the ability to meet demand is in itsself, significantly affected by global refining capacity.
One more thing. A HUGE part of the current BBL price of oil is driven by speculation on the disruption of supply. Today's high came on the bombings in Afghanistan. Tell me: How much oil comes from Afghanistan ?
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Refining capacity and Afghan bombings. No oil from Afghanistan - you’re absolutely right, headline makes no sense. Just like the media continual harping on refining capacity.
Excess refining capacity by definition has increased by 1.8 million bpd from whatever it was in May ’05. Less oil same number of refineries. The DOE reported refineries operated at 86.2% of their operable capacity last week, lowest number in few years and trend is down. Show me some statistics that show refinery capacity is short. Articles on cnn.com don’t count (see media comment above).
Also explain the logic of the refinery capacity argument. The consumers (refineries) of oil have limited capacity = a lower relative demand for oil. Logically oil prices should be depressed with refined product prices being high. Refineries should be making money like there’s no tomorrow. (Hint – go look at Valero’s earnings report from today, not happening. Valero complaining of low margins, while oil price is $96.90 today.)
PS. I’ll stop arguing now. You’re mind is probably made up. It’s just that I work in the oil industry and spend several hours a day researching this stuff and I end up with a lot of opinions.