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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: ild who wrote (40442)	3/20/2005 8:43:47 AM
From: Ed Ajootian	Read Replies (5) of 206107

ild, thanks kindly for the last link, that was very informative. In chart 14 of that it shows the spreads between light and heavy crude from 1995 to 2004. Whereas this spread used to hover around $3/bbl., it has recently skyrocketed up to around $11/bbl. This supports the contention that the world production of light sweet crude oil has peaked, at least on a temporary basis. Does anybody know of a web site that keeps a chart such as this updated continuously? Regarding the spread coming down due to refineries gearing up to produce heavy oil vs. light sweet oil, it is my understanding that to make US gasoline at a profit you need to start with light sweet crude, not heavy crude. Hopefully one of our resident refining experts can correct me if I am wrong. Secondly, its my understanding that converting a refinery to be able to produce heavy crude vs. light sweet crude is a very expensive and time-consuming process, and for that reason many companies have so far resisted making these changes. Over the next 6 months or so the oil markets will largely be driven by gasoline demand, so assuming that heavy oil is not used to make gasoline this should make for an interesting spring & summer.

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