Refinery capacity is not the reason crude oil prices are going up!!!!

Sometimes logic just creeps up on you, and everytime you hear the lie, the logic just makes you angrier and angrier.

Refinery capacity is not the reason crude oil prices are going up! This is propaganda! There are some legitimate reasons that I'm sure I will get into at length on another day, rising demand, geopolitical instability, a questionable free market, the possibilities and threats of peak oil, etc., but refinery capacity is not the reason oil prices are rising.

Econ 101. If demand is limited, prices will not rise. If refining capacity is limited, rising roughly in tandem with increased world supply, that means that there is no relative increased demand for its raw material crude oil. Therefore, drawing a connection between refinery capacity and crude oil prices is not supported.

And let me say that refinery capacity is a long term issue for the economy. It can and will impact the prices of gasoline, But there is no reason to make the connection to crude oil prices.

I am willing to accept the "threats to supply" argument for rising oil prices or the increased demand from China and India argument, but this repeated mantra that it is limited US refining capacity that is driving crude oil prices up is a lie. I don't know if this lie is promulgated by the industry to get relaxed environmental standards for expansion or just the result of lazy reporting, but this is a lie that keeps being repeated and I'm getting pissed off about it.

Here's the sample from this morning that ruined my mood. This is AFP, but they're all publishing these stories.

Every scrape and bang in a US refinery is jolting world oil markets as the price of a barrel of crude shoots up toward 70 dollars and more.

While Middle East tensions and huge demand from China and India are a major concern for markets, a series of accidents at hard-pressed US refineries have fuelled fears of shortages at the pump for drivers in America and Europe in the near future.

Oil facilities in the United States, where there has been no major investment for more than a quarter of a century, are working flat out to meet growing demand.

From 70 percent 10 years ago, the Department of Energy said this week that refineries were working at more than 95 percent of capacity. And experts said there is little room for improvement which is why even small incidents can affect oil prices.

In the past week the price of a barrel of the main light sweet crude traded in New York has risen from under 63 dollars to briefly surpass 67 dollars on Friday. Gasoline prices have also hit new highs for US drivers. ....

Higher gasoline prices and an energy law recently adopted by Congress may provide some incentives to building or expanding refineries. But any new plants would take time to construct and investors are expected to move cautiously given past trends.

The new bill offered 950 million dollars as an incentive for new refineries but experts doubt it will be enough.

Now, who would want us to think it's refining capacity? Perhaps the guys who just got a nickel less than a billion dollars of taxpayer money to improve their facilities......

Oh, and if they're reporting billions of dollars of PROFIT each quarter right now, tell me again why are we subsidizing them?