Originally posted by Zoom Zoom Diva: Increasing the price of crude oil because there are not enough refineries to turn it into gasoline is like increasing the price of wheat because there are not enough ovens to bake bred in.
It is completely illogical.
When there are not enough refineries to produce gasoline, it is usually because demand is increasing past the capacity of the current refineries.
What happens when your demand outstrips supply ? You end up with a shifting demand curve which increases the price.
When the cost of gasoline increases, oil which is used in it's production increases in value accordingly.
