[Enquest]

Most story's about analists I read say that the high price is not due oil peak or shortage. But rather because there isn't enough rifining capacity. The total oil market invested to little in the oil market and refining.

Could somebody debunk this or are they right. In other words they will build new refining installations and price will come down?

[RonMN]

We set up most of our refineries to refine "light sweet" crude...and that type of oil has definately peaked.

Then we haven't built a new refinery in the last 30 years...now we need refineries that will refine the heavy sour crude.

But heavy sour is harder to pump (more costly) and harder to refine (more costly) so i don't think the price will be comming down...it'll be more to cusion the blow (or keep us running a while longer).

[Doly]

I must confess I never quite understood this argument. Lack of refining explains why gas prices go up, but why should that make oil go up as well?

[mgibbons19]

Well, it shouldn't. Crue is 'upstream' from refining so it shuldn't.

[SpasticDancer]

$this->bbcode_second_pass_quote('Doly', 'I') must confess I never quite understood this argument. Lack of refining explains why gas prices go up, but why should that make oil go up as well?

[vegasmade]

oil, both heavy and light, is being pumped at 98% capacity if i'm not mistaken. tankers aren't waiting for refinery space to offload, the refineries are waiting for oil to show up. it's trouble at both ends. more refineries can't work any faster than the crude shows up, so they haven't been built. furthermore, new tankers aren't being built to replace old ones because there isn't more crude to be transported. damned if you do and damned 'cause you don't. the capitalist business model can be sumed up in a word-profit. Spending money on refining capacity cuts profits. Shipping capacity increases, cuts profits.
Exploration is the best indicator. Oil companies now spend more to find new sources, and are finding less. For them spending money now, anywhere else is silly. If there isn't more to find, there isn't more to refine/ship. In fact, they benefit from not spending the money on refining/shipping. The price at the pump guarantees profit for them, and if it costs more to get out of the ground, my wallet feels it. They can't recoup infastructure at the pump. It's considered the price to play.
Ultimately, consumer demand is irrelevent. They know there's only so much they can pump/ship/refine, and they aren't finding more to pump. That makes the other two break even.
All the money is at the pumping of the crude. No more crude, no more money. Even induvidual gas stations don't make money from gas. The infastructure is corporate owned and the individual gas stations only see about $0.01 per gallon. Yes, that's one penny per gallon.
Have you ever noticed new pumps being installed at your usual fill up spot. That didn't raise your gas price. The company providing the gas eats the cost. Actually you've been paying for their new equipment the whole time. It's figured into the profit ratio on day one.
It's surprising that a lack of new refining capacity hasn't worried anyone before now. Any business that doesn't expand infastructure isn't planning to grow. Sure demand can grow, but like i said, that end is irrelevent. They know we'll pump every gallon provided, which ensures profit. They've intentionally not stayed ahead of demand, and now they're just breaking even. Demand does not produce supply, it only limits consumption. We can't collectively will more crude oil into a position below the pumps, so money spent at the other two points is wasted. They know, have known it, and just haven't told us.

[cube]

$this->bbcode_second_pass_quote('vegasmade', '.')...
It's surprising that a lack of new refining capacity hasn't worried anyone before now. Any business that doesn't expand infastructure isn't planning to grow.....

[MarkL]

..

[vegasmade]

$this->bbcode_second_pass_quote('vegasmade', '
')Exploration is the best indicator. Oil companies now spend more to find new sources, and are finding less.