Commanders Post at The Warpath - View Single Post - Gas prices expected to soar past $3/gallon

djnemo65 · 09-01-2005, 07:06 PM

The argument that eco-terrorists are responsible for limitations in US oil refinement capacity is insipid. While its true that most Americans - eco-terrorists if you prefer - do not desire a refinery in their backyard (indeed, new projects have met predominantly local opposition) the Big-Five oil companies are equally reluctant to open new refineries. The reason? The status quo situation is such that, absent extant oil reserves, supply shocks artificially spike oil's market value by impeding demand. While this is bad for us, it is very, very good for the oil companies' profit lines. If you don't believe me, see a 2001 FTC report which inidicated just this: that the big five had artificially inflated prices by intentionally keeping refinement capacity low.

But more problematically, the argument for increased refining activity presumes oil supplies capable of keeping up with global demand, which they won't be able to. This is extreme myopia. Global oil consumption is predicted to jump about 40 percent over the next twenty years, at a time when Saudi Arabia will realize its peak production capacity. You should really read the stuff Houston energy investment banker Matt Simmons is writing about this right now. Pretty compelling...

09-01-2005, 07:06 PM	#15
djnemo65 Playmaker Join Date: May 2004 Posts: 2,836	Re: Gas prices expected to soar past $3/gallon The argument that eco-terrorists are responsible for limitations in US oil refinement capacity is insipid. While its true that most Americans - eco-terrorists if you prefer - do not desire a refinery in their backyard (indeed, new projects have met predominantly local opposition) the Big-Five oil companies are equally reluctant to open new refineries. The reason? The status quo situation is such that, absent extant oil reserves, supply shocks artificially spike oil's market value by impeding demand. While this is bad for us, it is very, very good for the oil companies' profit lines. If you don't believe me, see a 2001 FTC report which inidicated just this: that the big five had artificially inflated prices by intentionally keeping refinement capacity low. But more problematically, the argument for increased refining activity presumes oil supplies capable of keeping up with global demand, which they won't be able to. This is extreme myopia. Global oil consumption is predicted to jump about 40 percent over the next twenty years, at a time when Saudi Arabia will realize its peak production capacity. You should really read the stuff Houston energy investment banker Matt Simmons is writing about this right now. Pretty compelling...