Originally posted by JaTo: Big Oil aren't the only players in the market; there are smaller operations (true, there are only a few in the refining game anymore, but they are out there) that could expand operations and thereby try to grab a bigger piece of the pie.
I know of one particular small outfit that has set contracts out for about 6-8 months that favor their existing customers; they are running flat-out and have no excess capacity to speak of anymore and barely had any the last 5 years.
And therein lies the problem. Basically, we run at 95% refining capacity (supply) at present in order to keep up with gasoline demand on a daily basis, this leaves no room for error. Refinement capacity is our weak link. Crude oil supply has just started to become a problem over the last couple of years, and as more public awareness of the limited amounts of oil the earth has to offer becomes more widely known, supply concerns are starting to show up in our pricing structures, particularly as the Chinese economy ramps up and supply concerns multiply.
Right now, our refining capacity has been negatively affected, and since we don't have any "room to move" via extra capacity for refining crude product, that will inevitably affect current prices as suppliers become concerned about running short of supply because of a temporary inability to refine product, which we're already seeing via rationing in some areas. Couple this with increased demand, when supply is down, and you get what we're seeing, dramatically increased prices. Price is the only controllable factor to decrease demand. It all makes perfect economic sense to me, I don't see anything illogical ongoing.
If the American people weren't so shortsighted and self centered, i.e. a bit better educated, people wouldn't run to the pumps gassing up every car they own and certain regions wouldn't be experiencing the problems to the extent that they now are. But hey, I can't say I'm surprised...
