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

To: t2 who wrote (48863)	9/10/2005 5:01:50 PM
From: Bearcatbob	Read Replies (1) \| Respond to of 206327

I believe what is needed is not the posted price of West Texas Intermediate. We need to see all of the crudes - or a basket. One can watch Brent. Bob

To: t2 who wrote (48863)	9/10/2005 5:16:20 PM
From: Elroy Jetson	Respond to of 206327

You are correct in observing that refineries running close to maximum capacity should raise the price of refined products rather than crude oil. Crude oil prices are rising because the world economy is expanding faster than available crude supplies. This continues until oil prices rise to the level which causes a recession and conservation efforts. There is a linkage between refinery capacity and crude oil price, only in on small arena. The world has preferentially used "sweet" crude oil which contains less than 0.5% sulfur leaving large supplies of available "sour" crude. Since it costs billions of dollars to upgrade a refinery to handle sour crude, few have been upgraded. This has led to a situation where the price differential between sweet and sour crude has increased over time. In this way, tight sour crude refining capacity has pushed up the price of sweet crude oil disproportionately. Other than this one factor, analysts who attribute high crude prices to tight refining capacity are demonstrating their lack of understanding of the oil business. .

To: t2 who wrote (48863)	9/11/2005 2:17:07 AM
From: Taikun	Read Replies (1) \| Respond to of 206327

t2, <Was it instead the both crude and refining capacity were BOTH bottlenecks? > I also had the expectation crude would drop. Then I read China was going to begin filling the first of 100m bbl SPRs. Then I realized, if US refiners would have a Katrina-bottleneck it would represent an ideal time for China to begin accumulating aggressively, assuming they could book tankers (actually the fall is supposed to be shoulder tanker season) But I doubt China will ever tell us what they're really doing, so this can just be speculation. D