Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: patron_anejo_por_favor who wrote (65610)	5/17/2007 5:30:11 PM
From: Elroy Jetson	Read Replies (1) of 116555

During the 1965 to 1970 period we had a large military demand, but we also had a lot of spare refining capacity - hence no large rise in the cost of refined products. Today we have tight refining capacity and so the incremental addition of military demand for the Fiasco in Iraq has sent the price of refined products soaring and refining profit margins as well. The incremental Chinese demand has mostly gone into sour crude since the sweet crude was already contracted for. This is why Iran has increased production from sour crude fields and why the Chinese are building them a sour crude refinery based on the many sour crude refineries they have built for themselves. The effect of Chinese demand on sweet crude prices is vastly over-blown. .

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