Looks like it’s shaping up as the “perfect storm” for oil.
Due to the red tape involved it’s been over 30 years since a new refinery has been built in the US. For example, Arizona Clean Fuels, has been trying to build a small refinery outside Yuma for almost 10 years. It took five years just to get air-quality permits. Now they hope to be operational in 2010, 15 years after they started the project.
The more expensive sweet crude is in short supply while currently we have a good supply of sour crude but the sulfur content makes it considerably more expensive to refine.
More taxes are paid to the federal government than oil companies make in profit.
Officials at OPEC and the IEA say oil production is decreasing in 54 of the world’s top 60 oil producing nations.
The US is competing with the nationalized foreign oil companies that control 75% of the world’s oil and we rank 14th in petroleum reserves.
Worldwide increased demand, China has 1.6 billion people and its growing economy is putting more of those people in a position to afford an automobile.
Democrats and a handful of RINO’s (including John McCain) have been blocking any attempt to drill the known reserves in ANRW for years.
And yes the oil speculators do have a part in driving up the price, albeit less than what our legislators imply.
Then on top of that something I never really thought about was the value (devaluing actually) of the dollar as pointed out in this excerpt from an online article;
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David T. King, a former chief of the New York Federal Reserve’s Industrial Economies Division, noted on the editorial page of the Wall Street Journal earlier this year, when oil prices were at around $120, that last August the dollar price of oil was $70. King points out that the current spike in oil and other commodity prices coincides almost exactly with the Fed’s decision to turn on the monetary spigots to save Wall Street.
The day that the barrel price of oil in dollars was exactly the same as in Euros was in 2002, when both were about 25, King notes. Since then oil has risen by 50 Euros in the past five and a half years. It now stands at 75 Euros, triple what it was then.
But check this out: in the US, the price is over $120, about five times what it was then, King says. He says that the collapse of the dollar exchange rate explains at least half of the increase in the pump price of gas over the past five years.
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I’m Just Saying – When you add it all up I don’t see it getting better anytime soon.