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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: SilentZ who wrote (228585)	4/10/2005 11:35:31 PM
From: tejek	Read Replies (1) \| Respond to of 1578699

The truth: war in Iraq + lower supply of oil = higher gas prices. But is there really much less oil than there was before? Everyone's needs are still being met without a problem. There is a somewhat less oil flow. It wasn't too serious until the middle of last year when the world economy started to improve. And still, there are no shortages but there is the fear that there could be shortages because of the turmoil in Iraq, and from time to time, trouble in two other major oil producers, Nigeria and Venezuela. The concern over shortfalls generates a psychology of fear and greed in the oil markets, pushing the price of crude up. No one wants to risk being caught selling the oil too cheaply should there be a real shortfall. So to answer your question........there is less oil.......not enough to create a shortage but enough to be a problem if one of the other major oil producers gets into trouble. Nigeria is particularly a problem because of periodic strikes and possible insurgent problems. One more thing.......US refineries are operating at 96% capacity. That's a margin with little room for error. Should a refinery go down for whatever reason, spot shortages occur. While that only happens on a short term basis, such temporary shortfalls add to the markets' wariness. Bottom line: if Iraq were not a mess, oil would be around $25-30 per barrel. ted