Early each year, usually towards the end of winter, the US refineries are required by enviromental laws to switch blends. Doing this takes refineries off line for a short time causes a bottleneck.
However, this year you throw in the fact that a number of refineries are operating at reduced capacity because of maintenance and/or equipment problems and what do you know, our vulnerability is shown.
If one or two large refineries go down for an extended period of time, we are screwed. We do not have enough capacity to take up the slack. If there is a successful terrorist attack on a major oil producing field somewhere in the world, oil prices will spike up substantially within hours.
“However, this year you throw in the fact that a number of refineries are operating at reduced capacity because of maintenance and/or equipment problems and what do you know, our vulnerability is shown.”
How do we know that these maintenance and equipment problems are genuine?? I think these oil companies have figured out that they can charge higher prices when they produce less. That’s exactly what Enron did in California a few years ago, when they reduced the supply of electricity and were able to charge higher prices. It’s a win - win situation!