Oil prices & the economy

Unknown

Oil refineries are maxed out. Whenever one is shut down (like, for a hurricane in the Gulf), we dip below or nearly to below demand in supply capacity. There is no spare refining capacity. There is very little spare production capacity in OPEC (as you noted, they are pumping as fast as they can, and since demand will outstrip their ability to pump before they can fix it so they can pump more, there is speculation there as well based on the fact that price WILL rise), and non-OPEC nations aren't cranking out as much as they were expected to (Russia, in part, nationalizing their biggest producer had a little something to do with that).

Put that with Chavez in Venezuala (one of our larger suppliers) getting really buddy buddy with the chinese, instability in the mideast, the fact that it takes a long time to get production or refining capacity up, and china and india are focused on becoming the next americas in terms of energy consumption, and the picture is bleak.

The speculators are speculating for a reason; they can't lose. There is absolutely no possible way oil is dropping in value any time soon. Maybe, on the eve of a new oil field opening or a refinery opening, there will be a big drop as a bunch of people bail out, but that's not going to happen for a few years at least.

Steve Ebels_3

Hang on to your.............

Hang on to your (pick your appendage) tomorrow if they find major damage at some of the refineries along the gulf coast. Last I heard there was an offshore oil rig blown up against a bridge somewhere in Mississippi or Alabama. Could be quite a ride.

BTW uncapping the strategic oil reserve will do absolutely no good if the refining capacity is not there to handle it. The talking heads are grasping at straws trying to make a story out of it.

Mark_25

Bullpucky. My job as a Mechanical Engineer just got outsourced to Poland. The USA is sending high tech high paying jobs overseas as fast as it can. I'm now looking for work again. The unemployment rate here is 7%, highest in the nation.

Gordy

Gordy

Right On

It would take Saudi Arabia, Russia, and the United states producing at capacity "04 production numbers" just to satisfy the United States oil consumption rate in 04. World consumption out paces world production by 1,000,000 Barrels a day by 01 estimates. Has to be a larger margin by now.

Steve Ebels_3

You must be from Michigan

I was talking last week with a GM engineer that we did a job for. He flatly stated that from what he can see GM won't be doing anything here within 15 years at the rate they are going. His impression was that they are going to move the whole bleedin' company overseas.