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Current Events » in reply to The refinery saw is more of a 'BOO!' statistic than very meaningful

The perfect storm
ER — (archived)

The refineries are already fully utilized and exceedingly profitable because the price of oil is so high. Why invest more money on refining capacity when the production of petroleum cannot be expected to increase indefinitely? In fact, it has probably peaked already; if not for natural reasons, then because the producers prefer to adjust the production of a limited and diminishing resource to its most profitable level. Only a fool would invest in surplus capacity now, especially when someone else controls production. It's just not good business.

Besides, as long as enormous amounts of high-quality crude are easily accessible in the MidEast why would anyone want to invest in risky drilling ventures that get riskier every day? It might make sense from a national security perspective, but not from an international corporate point of view. Sure, if you get what looks like a sure thing and if you get lucky, it may give you a short term bonanza, but it does nothing to alter the overall dynamic of this industry. Oil companies make money by selling oil, not finding it, and higher costs of buying it can always be passed off to the consumer. Even at a fixed margin percentage, higher consumer costs translate directly to higher corporate profits. Where's the incentive to take huge risks? The fact that demand may outstrip supply may be a tragedy for the world, but not for the oil merchants. They will do well until the last drop of crude is pumped out of the ground. It's the perfect storm of opportunity for them. Besides, as we all know, in the long run, there is no long run.

Don't just take my word for it, DA MAN saw this coming a decade ago.

http://www.energybulletin.net/559.html

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