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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (48860)	9/10/2005 4:56:39 PM
From: t2	Read Replies (3) \| Respond to of 206326

Can anyone explain how Crude Price relates to Refining Capacity. This has been puzzling to me for a while. If the the bottleneck is refining capacity, crude oil price should be dropping. There should be more and more crude waiting to be refined, creating a glut and a price drop. Was it instead the both crude and refining capacity were BOTH bottlenecks? Can that even make sense. (My hunch can only be that there was less crude ordered than could be supplied.....and the suppliers liked the situation anyways). Considering that unleaded has recently gone up while crude prices have dropped.....are we now seeing a true bottleneck at refining capacity. That would explain the drop in crude prices...and seems very logical. The situation prior to Katrina was the most puzzling. 2 bottlenecks? The only thing I can think of is that Saudis are happy with current level of prices and therefore only fill orders as they are received from refiners(?), which would mean that crude prices are somewhat managed and not a true picture of supply and demand. That would mean they are capable of delivering much more than we are currently getting, but they just don't need to. Only refineries running out of crude (prior to Katrina) would support the idea of a worldwide crude shortage...and I don't believe any of the refiners made that complaint. I hope someone can clarify this. Thanks.