However, when crude supply is 'tight' -- which it hasn't been all this year; prices rose wildly on the TRUE fear factor, and never mind that silly telly programme -- refiners WILL pay up for feedstock, whether heavy, sour, or Hillary (both heavy AND sour, pls note).
Refiners must operate their plants, and, to this end, WILL pay the cost to adjust their refining parameters (when able; not all are) to accommodate the quality of the existing supply.
This has historically produced some odd results from time to time, but, as I'm sure you imagine, refiners know their own business FAR, FAR better than any would-be meddlers (read: gov't a--holes) will ever do.
Do pls keep in mind also that cracking (i.e. producing gasoline and other added-value products) and distilling (i.e. producing #2 heating oil and diesel, and jet and kerosene) are just two sides of the inevitable coin. A refiner can get between X and X+N % of distillate from a barrel, and similarly between Y+P and Y % of crack product from the same barrel.
The refiner must to some extent guess (they're VERY good at this, btw) the demand over the entire mix of product, but said guess will occasionally be badly wrong, as when #2 prices spiked late in the heating season in 2000. Which error, naturally, led to the idiotic phenomenon of the Seed Of Chuckie and some of his up-East colleagues whining for a ''strategic'' (pardon my vomit) heating oil reserve.
Nonetheless, when speaking of crude and/or refining, the paranoiac notion of ''conspiracy'' will always be in play with the consuming public. This has been the case for almost 30 years because:
1) just after December 1972 (the start of the first ''embargo''), some integrated outfits DID try to rip off the public (w/o, I will note, much success over any but 30-60 days' duration), and,
2) gov't discovered, during the 1970s, that it was/is ENTIRELY to their advantage TO try to scare the populace, because they could (and did, and have, and continue to) acquire more power by railing against ''evil Big Oil'', and,
3) of the advent of the so-called environmentalists, who are perhaps the ultimate false-flag artistes of course, and find their peculiar interests entirely aligned with gov'ts Actonesque interest in controlling the production and distribution of energy products.
Disclaimer: I did not own ANY shares in any energy producing or refining or distributing company, bar 200 shares of Exxon left me by my grandmother (which I promptly sold in 1975, btw), from 1972 through 2001. From that date, only because I can add, and no special expertise required, I'm loaded to the guts with shares in assorted mineral (read: NG/oil) trusts.
This is just a wager (ALL purchases of shares are a wager, ok? Got it?) that gov't will continue to meddle and, whether by intent or not, keep inflating energy prices. This is a LONG-term play, not a short one; I rather think it will end sometime between 2009 and 2015...but I guess we'll both see about that in, er, longish order.
Best of the New Year to you!
Someone who knows the "skinny" about oil. . .finally!