20$ drop per barrel of gas

apnews.myway.com...

WASHINGTON (AP) - Saudi Arabia's foreign minister said Thursday he would like to see the price of oil fall about $20 a barrel, pointing to limited U.S. refining capacity as a reason for soaring gasoline prices.

"We are adding barrels of oil on the market," Saud said. "It has no place to go."
The Saudis frequently have blamed America's high energy prices on a lack of refineries but have not explained why such a shortage would keep crude prices high if there was oil that couldn't find a refinery.
Asked about that, Saud said, "I wouldn't be surprised if soon you will see the product (gasoline) prices going up and oil prices going down ... because of the lack of refineries."

Is this just more padding of the supplies by Oil producers or is this a legitimate point ? Or are our leaders pre planning for a real peak later by destroying refinery capacity now?

[edit on 2005-9-25 by NuTroll] fix title.

[edit on 2005-9-25 by NuTroll]

The issue regarding refining capcity and the resulting effect on gasoline prices is very legitimate.

That being the case, I am curious as to why you think a $20 drop pb in oil would equate to a $20 drop in gasoline?

This is not the case.

As you quote yourself above, gasoline supply is a function of refining capacity. You could have every last drop of crude oil in the world, but unless you can process it into finished petroleum products, it's pretty dman useless.

In the next week alone, we will have to use up nearly 6% of our national gasoline stockpiles just to compensate for the 20 million barrells of refining capacity -- 11.2 million barrels of gasoline that will fail to reach the market.

I just read a bit from the guy that writes for Junk Science, an article from 9-29-05 that submits the hypothesis that interference from EPA has a hand in high gas pricing. He also states that US refineries have dropped from 300+ in the 1970's down to about half of that today. But that our refining capacity has increased over that same period. This is in large part because of increased refinery efficiency durning this same time frame.

The link is at the bottom of the front page at FOX News. I'm not sure if it's ok to link the article, so I'll leave it to you all to find.
The article is written by Steven Milloy.

I have also recently read an article by a well-known economist who suggests that even for the worse case scenario, that gas prices in relationship to cost per barrel would make $3.00 a gallon gas be the equivelant to $90.00 a barrel for crude.

It would seem that there is more to the game than meets the eye of the casual observer. The arguement has also been made that releasing the strategic reserves would drive gas prices down. I have not seen a single bit of evidence that would suggest that this would drop gas pricing. If refining capacity is maxed then flooding the tank farms is not going to uncrease the volume of refined gas.

There are other considerations in the arguement that don't always get due consideration. Like unenforcable and unrealistic regulations from EPA, political influence and pressure from environmental PACs, the low return on invest from the building and operating of refineries, the strategic importance of crude oil and refined products on national security, the arguemnet over the state of oil reserves on the planet, the impact of urban planning regarding mass transit, and the push for alternative fuel systems and transportation options for the future.

We have a way to go in analyzing these influences. I don't believe for a minute that gas should be $3.00 a gallon. The economic analysis of the oil industry from point of origin to finish product costs just don't seem to hold up. The regular arguements about peak oil and OPEC don't hold water either.
I'm going to keep searching for more solid evidence until I'm satisfied.

[edit on 2-10-2005 by sharkman]