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Politics : Sioux Nation

DJT 14.40

+2.8%

Jan 9 9:30 AM EST

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To: manalagi who wrote (22958)	6/18/2005 5:05:05 PM
From: CalculatedRisk	Read Replies (3) of 362210

If you have a system with a bottleneck (oil refineries in this example), what will happen? The Supply of raw materials (crude oil) before the bottleneck will exceed demand from the refineries (because of the bottleneck) ... and the price of crude will drop significantly. The Supply of finished materials after the bottleneck will be limited (once again because of the bottleneck), and the price of the finished material will rise accordingly. This will lead to lower input prices and higher sales prices. This motivates the owners of the bottleneck to expand (assuming no monopoly). Has the price of oil dropped while the price of motor gas risen? Nope. Oil is high and gas is appropriately priced based on oil. Therefore there doesn't appear to be a refinery bottleneck. P.S. Others have looked at the refinery issue from different perspectives and the answer remains the same: right now there is not a refinery problem.

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