By the way, I noticed there were several comments regarding the lack of new oil refineries as a factor in the so-called supply shortage that is generating these sky-rocketing gas prices.
I suggest, before we continue to completely give in to this notion, that we consider the words of J. Stephen Simon, the Director and Senior Vice President of Exxon Mobile Corporation, from an interview published in a 2006 edition of Exxon Mobile's marketing periodical,
The Lamp, which is directed at existing shareholders and potential investors.
Quote:
Q: How do you respond to those who want new refineries to be built in the United States?
A: There has been a lot of media attention on refining capacity recently, particularly here in the United States. While it's true the number of U.S. refineries has dropped over 50 percent over the past 25 years, refinery output has actually increased more than 25 percent, as remaining refineries have been expanding through debottlenecking, higher utilization and technology advancements.
For Exxon Mobile, our track record speaks for itself. Since 1995, our U.S. refining capacity has grown about 2 percent a year, faster than demand growth and faster than the rest of the industry. In fact, over the last decade, we've added the equivalent of three new refineries by expanding our existing facilities. We believe this is the right approach since it's a much faster way to increase supplies, and these expansions can be implemented at a fraction of the cost of building a new facility.
J. Stephen Simon
Director and Senior Vice President
Exxon Mobile Corporation
|
The Lamp, 2006, Vol. 88 No. 1, pg. 8
I recommend reading the entire article for more insight.
You see, I'm not convinced that the issue of new refineries is really an issue for industry insiders. Based on the last sentence in his statement, Exxon Mobile hasn't actually been seeking a site in someone's backyard to build any new refineries because they don't even see it as an economically viable alternative for increasing production.
New refineries aren't necessary, because they have been able to keep up with the increases in demand here in the United States, in fact, as he states it, "faster than demand growth."
While I agree on a global scale that demand has increased, particularly in China and India, the United States is still by far the leading purchaser and consumer of crude oil. And if the oil corporations are able to handle the increase in demand, then the notion of short supplies as the primary reason for the sharp increases in gas prices may be a bit of a red herring. If you really think about it, are there any indicators to suggest a decrease in supply due to an increase in demand, other than high prices? I challenge you to find a single gas station that has had to post a sign that says "Sorry. We're out of gas."
The notion of supply shortages was also the explanation for the stark increase in natural gas prices in 2001, and the rolling blackouts in California, both of which were shown to be examples of market manipulation due to deregulation, and greedy, conniving energy traders.
Currently, I'm focussing more on the aspect of Futures Trading, Market Speculation, Hedging and the
Enron Loophole. Wall Street is blowing a bubble, and a lot of people are making tremendous amounts of money at our expense.
I will post more on this angle later.
