To: Tom Smith who wrote (43 ) 9/9/2000 9:59:18 PM From: patron_anejo_por_favor Respond to Nice editorial, Tom. An important point to remember(especially given the upcoming events in Vienna) is that crude per se has little to do with inflation. Rather, it is the wholesale and retail cost of the distillates (heating oil, gasoline, diesel) that is the key, for that is what wholesale and retail consumers (with the exception of chemical companies) actually use. Distillate prices for the forseeable future are not going down, even if there were an extra 5 million bbl/dy pumped out of the ground. Why? Mainly because worldwide refining capacity has not increased over the last several years, due to persistantly low oil prices and really poor public policy (at least in the U.S.) All the environmental regs on new refineries have caused a near halt in new refinery construction, and that is what is needed now. Unfortunately it will take a minimum of 2-3 years to restart it. In addition, there is no available capacity in worldwide oil tanker transport (witnessed by skyrocketing lease rates for tankers in the last several months). That's why all the nonsense you hear about massive supplies of oil being "on the water" are irrelevant (even if true, which is debatable, since about half of the tanker fleet is empty and on return trips).
