<It's no longer 'oil', it's 'liquids' The Oil Drum DrumBeat: October 31, 2007>

75 comments on OPEC says pumping more won't bring oil price down

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Starship Trooper on October 30, 2007 - 9:37pm Permalink | Subthread | Comments top

It's everything except the end of the gravy train. I was told last week (by a so-called economist) that the reason why GOM oil peaked in 2002 was because we did not have enough refining capcity (so by his logic we had to keep paying someone else for the oil so that we could putting foreign oil into US refineries...blah, blah, blah).

Here is what will prove us wrong...6 continous months of production of crude plus condensate at more than 74.3 million barrels per day.

"We" will then have to go abck and recalibrate. Until then, the Iron Triangle will do it's best to confuse.

"If you can't convince them, confuse them!"

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seismobob on October 30, 2007 - 10:50pm Permalink | Subthread | Parent | Comments top

The really stupid thing about blaming high prices on lack of refining capacity is that if this were true, crude should be low price and gasoline high price. Crude is the feedstock for gasoline. If there were too little refining, there should be a shortage of gasoline and a glut of crude. I guess OPEC doesn't know that! Should we tell them?

http://home.entouch.net/dmd/Oilcrisis.htm

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EthanS on October 31, 2007 - 11:55am Permalink | Subthread | Parent | Comments top

In a competitive marketplace, you would be correct. Limited demand from refiners would depress prices as producers compete to win market share.

But...

* Oil is NOT a competitive marketplace. It's dominated by a cartel.

* OPEC knows exactly how much demand there is, because it knows exactly how much refining capacity there is.

* OPEC (esp. Saudi) is willing to lose market share in order to maintain a higher price, even if that benefits free riders like Norway, Russia, and the Oil Majors.

The reason there is no glut of crude is that OPEC is restricting supply.

--

Another point: why aren't gas prices rising? Flat demand in the US from high prices. No shortages - not at this price...

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westexas on October 31, 2007 - 7:11am Permalink | Subthread | Parent | Comments top

If any new readers are wondering, the "Iron Triangle" definition:

http://graphoilogy.blogspot.com/2007/07/net-oil-exports-and-iron-triangl...

In regard to discussions of Peak Oil and Peak Exports, I have described what I call the “Iron Triangle,” which consists of: (1) Some major oil companies, some major oil exporters and some energy analysts; (2) The auto, housing and finance group and (3) The media group.

If one resides in the oil industry leg of the Iron Triangle, and if one has concluded that Peak Oil is upon us, or extremely close, does one say, "We cannot increase our production," and thereby encourage massive conservation and alternative energy efforts, or does one say "We choose not to increase production and/or we are temporarily unable to increase production for the following reasons (fill in the blank)?"

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75 comments on OPEC says pumping more won't bring oil price down

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