The following speculation is not susceptible to relegation to “My Flameouts” if proven wrong. I have not studied the topic thoroughly enough – but the thought presented is intriguing… It is PURE speculation – and ODD speculation at that…
- Katrina took oil refineries off-line…
- Rita took more oil refineries off-line…
- The price of fuel will INCREASE
- The price of oil will DECREASE
Oil is priced world-wide. The storms took between 10% and 20% of the American refining capability off-line for an extended period of time. Those refineries will not be purchasing oil to process. Thus, there will be a glut of oil while the refineries are repaired and/or replaced. There is not enough extra capacity in American refineries to pick up the slack. Too much supply to match the demand forecast.
And that is where the increased cost of fuel comes in. Our demand for fuel will not be dramatically reduced as a result of the hurricanes. We will simply refine less fuel. This scarcity will also affect Baja California, Mexico. Too little supply to match the demand forecase.
So here is the odd thought that will get the anti-Capitalists and the illiterate Lefties all a’rantin’. The price of gas will be increasing as the price of oil decreases – and there is absolutely nothing the President can do about it. More oil will not help, but people will prove too stupid to figure it out within the political news cycle. And, the media is definitely clueless – see a Google search on ‘oil refining storms capacity reduction’
Enjoy that political battle.
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