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

To: i-node who wrote (229009)	4/12/2005 8:15:51 PM
From: Road Walker	Respond to of 1572885

re: I don't purport to know that much about the subject. But I find it bizarre that refineries operating at full capacity aren't being augmented with more capacity given the demand for the product. It's not just refining, it's also exploration. I'm not an expert either, but consider a scenario: Assume that the oil companies know, for a fact, that oil demand is going to outpace oil production going forward (most likely because oil reserves are overstated and production is going to be flat or decline). As a CEO with a fiduciary duty to the shareholders, what would you do? You could invest in refineries, but there will be no increased oil to refine. You could invest in exploration, but you know that in order to make the exploration make financial sense, oil would have to go to outragious levels, and that would kill the economy. On the other hand, you could cut exploration (cost), run your refineries at full (and maximum profit) capacity, let the price of oil go up, and let the profits roll in for the shareholders. The growth game is up, might as well milk it for the owners. I don't know if that's the way it's playing out. But the oil companies are investing much less of their profits in exploration, and nothing in refining. Why? John