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