[liberallarry]

The market doesn't believe OPEC claims of adequate supply. The author doesn't explain why refinery problems result in higher crude costs...and doesn't mention that the Saudis are increasingly replacing light, sweet crude with the sour stuff.

[M. Espinola]

"The market doesn't believe OPEC claims of adequate supply. The author doesn't explain why refinery problems result in higher crude costs...and doesn't mention that the Saudis are increasingly replacing light, sweet crude with the sour stuff."

Well for one thing the author is based in the Persian Gulf and of course he not going to mention his Saudi comrades are playing 'sour' games.

If you have any links on hand relating to the Saudis pulling that stunt please post in here. People need to be informed about our 'royal' Wahabbist 'allies'.

[konaice]

replacing light, sweet crude with the sour stuff.

Saudi crude has always been high-sulfer, when compared to Texas or gulf coast crude.

We have to build new refineries that can deal with this, because we've been cherry-picking the sweet stuff too long.

[Iscool]

The author doesn't explain why refinery problems result in higher crude costs...

According to this guy, it could be because bananas are yellow, or because water is wet...

"But if we talk about other issues or realities which play a role in the price increases like geopolitics, refinery problems or psychological problems... then prices may cross $100."

[jwpjr]

re: The author doesn't explain why refinery problems result in higher crude costs

I have long since learned that economics is a 'science' that is far more akin to black magic than launching a mission to Mars, but this statement seems to be exactly 180 degrees out of phase with common sense. A hitch in the git-along of the refinery process should result in a decrease in demand for the raw product, and a decrease in demand usually signals a fall in price for the product.

I have long since felt the whole crude oil -> finished petroleum products food chain could be seriously disrupted if the masses would simply curtail their purchase of the finished product for a week or so.

There is precious little reserve capacity in the storage facilities around the country. Stopping the flow of gas out of the service station's (now there's an oxymoron) very limited storage systems and they would not be able to accept any more fuel from their supplier. When the supplier could not make room in their storage facility for more incoming product then the refinery would soon be unable to ship product from its storage tanks and would be forced to stop producing additional product until it had someplace to put it. If they can't refine, then they don't need additional crude oil and the ships that bring it would have no place to unload their cargo. When no more crude could be put on board tankers the limited storage facilities in the producing countries would soon be full and they would have no place to pump the oil when as it came out of the ground. Without that daily cash flow everyone along the chain would soon begin to look for ways to dispose of the excess inventory. Supply and demand would take over and the price of gas would fall quickly as the everyone along the line sought to increase their cash flow. These producing countries are VERY dependent on the cash flow from their exports.

I know it seems a bit far-fetched, but what if I had told you in 1990 that less than 20 people armed with nothing more than box-cutters would set in motion a chain of events that led to the destruction of not one but two of America's greatest buildings, an attack on the Pentagon and eventually a war that would take on terrorists around the world.