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70 comments on Can Acts of God and Bush Explain the Plateau?

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Cherenkov on January 4, 2006 - 2:18pm Permalink | Subthread | Parent | Comments top
If you have less refinery capacity, in effect not enough to process all the available crude, then doesn't that mean that crude supplies pile up waiting to be processed? Doesn't that mean that crude prices should fall as the stuff lays about waiting for processing? Wouldn't we be swimming in unprocessed crude? Doesn't that mean a disconnect between crude prices and refined product prices? Is that what we are seeing now?
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louGrinzo on January 4, 2006 - 3:57pm Permalink | Subthread | Parent | Comments top
Crude prices will only fall in the face of a lack of refinery capacity if the oil producers keep pumping at a higher than needed rate.  The oil producing companies and countries are generally very good at modulating output to maintain at least an acceptable price level.

In theory it would work as you say, but in reality the decision-making entities involved react in real time to the situation.

This is a good example of why I'm so unhappy with many of the static analyses (both optimistic and pessimistic) I see about energy issues--there is very often just one little, buit ever so critical, detail missing from the model that makes all the difference.

(And please don't take this as a criticism of you, Cherenkov.  I'm talking about the extremists from the ends of the bell curve here, not the ration TODdlers.)

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70 comments on Can Acts of God and Bush Explain the Plateau?

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