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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Rolla Coasta who wrote (9231)	9/12/2006 5:32:34 PM
From: Snowshoe	Read Replies (2) \| Respond to of 217588

>>This bottleneck of refining capacity continue to be the main problem in the coming decade.<< Refineries are easy to build, and the market is responding... Massive Investment in Oil Refineries Could Cut Global Fuel Prices, Expert Says Message 22494667

To: Rolla Coasta who wrote (9231)	9/12/2006 8:55:13 PM
From: Elroy Jetson	Respond to of 217588

The world doesn't have a shortage of refining capacity, but it does have a shortage of high-sulfur refining capacity. In a real sense the current high product prices are a ploy to make China, India and Iran build high-sulfur refineries. High-sulfur refineries cost more to build and more to operate. In return, you get to use less expensive high-sulfur crude oil. But when oil prices tumble, the products produced by high-sulfur refineries simply costs more than conventional product because the margin between high-sulfur and sweet crude diminishes. Large oil companies have light sweet crude under contract, which means that nations like China and India with a growing demand must buy sour high-sulfur crude - which means they get to drop $5 billion a pop for sour crude refineries. Iran gets to take the "old maid card" too because most of their production is high-sulfur crude. Chevron upgraded their Pascagoula Mississippi refinery to high-sulfur in 1980 during the last "refining shortage" / gas crisis. The subnormal economic payoff for this investment reinforces the idea that China, India and Iran get to be the economic patsy this time around. Bush thought he could blackmail oil companies, into making more refinery expansion than they want to, by his now famous threat during his "State of the Union" speech to build oil refineries on military bases. That idea died within days with heavy oil company opposition. Once China, India, and Iran bring enough high-sulfur refineries on-line, there is no longer a "shortage" of refining capacity. .