To Drill or not To Drill? (Page 2)

I had read that too. ANd I guess you have to ask why we're only refining at 88% capapcity. Is it because there's not enough crude? Or is it because the oil companies are entirely unmotivated to refine more. I mean, why bring unused refineries on line or build new ones and in turn have to higher more employees and increase their operating when their profit margins are so high? If they produce more gas, the price is just going to go down, right? So, if I own an oil company, what's my motivation to do that? Altruism? 

That's interesting.

How does the current state, and future speculation, of the dollar play into all of this?

Jim, from what I understand the "crack spread," which is basically the profit margin for refining, is so low right now that there is no motivation to increase refining rates. The spread has dropped 60% since May 2007 and is now (as of April) about $13 per barrel. Basically there is at the moment no money to be made in refining.

The spread will go up under some combination of lower prices for crude and higher prices for refined products.

See for example:

http://blogs.wsj.com/marketbeat/2008/04/21/a-slippery-spread/

ETA: All of this data supports the argument that lack of refinery capacity is NOT the problem. (although re-tooling of refineries to handle heavier crude may be an issue, still haven't gotten a definitive read on that)

Heh.

knew you guys would like that one!

Agreed 100%, which is why higher gasoline prices are good.

You know, it is this kind of thinking that drives me crazy and well frankly pi$$es me off.... That is a very narrow minded thought and it is not just people driving to the movies, the pool, or even SUV's that if they stopped the the gas would come down to $2 a gallon....

Not only do 18 wheelers use gas to provide products to you like food, milk, and other chemicals but also planes (which get me to my wife and her to me), tractors that get all of our food products from the land to the trucks.

But also products like these have patroleum in them and the high price of oil effects them ... Hearing aids, bandages, artificial limbs, heart valves, soap, carpet, paint, balloons, photographic film, insecticides, margarine, telephones, polyester, ball point pens, sunglasses, trashbags, nylon rope, crayons, toothbrushes deodorant, nail polish, tennis shoes, lipstick, and all plastics... I could go on for ever

So the point is, when oil goes up it effects more products than you think about than just gas. It makes the price of products that have oil in them go up also. It is not only just about the gas we drive people... So when you say :hell ya to high gas prices but then walk into the grocery store and bit*h about the high price of food, and other products it is your own fault....

Yes I agree we need to find alternative fuel sources... but for now lets dance with who we brought.

But without high oil and refined product prices, we have no incentive to discover and develop alternatives. The progress in deploying alternatives over the last 30 years should be evidence of that.

The problem is "who we brought" is $60 oil, and she is now a lot higher class of dame at $130.

There will always be incentive to discover and develop alternatives, its called a patent and money....
Gas prices have really only been high in the last 10 years but some of the technology that has come down the pike has taken a long time to develop (the Tesla car for example). People are always going to want to test the limit of developments and technology, that is why we are not all driving model T's and have windmill providing our energy....

There are tons of companies that out there that have been looking for alternative ways to provide energy; they have been for years.

Capitalism will be the way we get alternative fuels...

huh, turned out we were in agreement all along!

Actually there are 7 new refineries being buit right now. Too bad they are in Iran.

http://english.farsnews.com/newstext.php?nn=8703160400

So Iran's main weakness was that they had all this oil but no way to refine it. An enemy of Iran could cut off the gas imports and effectively stare them out. So they they are going to get 7 new refineries and we'll get none.  And no one sees an issue with this?

Idiots ruining this country... total idiots (and both of the new guys are no better)