The Oil Drum

But this same conclusion can be drawn if the US has moved to more advanced refineries and is taking advantage of the price differential between light sweet and the heavier sour grades to make more money on refining. I agree that the US crude supply seems to have gotten heavier and sour but this is by choice not because of a global peak in light sweet oil.

You would have to have the same information for more countries to see if peak light sweet is real. As the spread price spread between light and heavy contracts over the coming years we may well see this curve move back.

So you need to show that we have not significantly upgraded our ability to handle heavy sour oils in the US. If I understand what Robert has said correctly the fact that the opposite is true and most of the refinery upgrades over the last few years included extensive support for refining heavier sour crudes.

I think you will find if you graph the capability of our refineries you will see that the correlation is actually between refining capability and not peak light sweet.

The widening price spread between light and heavy sour oils can easily be explained by the fact that its a lot easier to get a simple refinery in operation in a region that demand is growing. Also note that the asphalt and other by products used in construction such as roofing tar are in higher demand in these same regions since road construction is also growing. So its not exactly a bad thing to practice simple refining in areas that are developing a more extensive automobile culture.

So the global price differential that resulted in a move to complex refining in the US seems to be simply the result of growing demand for the mix of products from simple refining of light sweet in the developing world.

To me its common sense that the increasing demand for oil products in the growing second and third world economies would be met with and initial expansion of simple refining capacity and thus price pressure on the lighter and sweeter grades even though the overall mix does not seemed to have changed significantly.

I know this is a bit more complex than simple peaking of light sweet but the global data seems to indicate that both types are readily available but the price spread is being caused by other factors and driving the use of complex refining in the more developed world.

In any case this is a Robert problem IMHO.