Originally Posted by tom281

I believe there is not the amount of increases or significant demand that would cause oil to shoot to $130 a barrell. China certainly buys a ton but you think it's much more than last year or the year before? Doesn't much matter about demand either when supply is way more than capable.... heck some experts say that we have more oil in Alaska than they do in the middle east but we can't drill it because it's part of the reserve (for now).

I buy many large commodities for a living..... oil, sugar, milk, plastic, paper, etc. and I see this happen all of the time. Usually it's created by a few large companies that band together to fix their pricing and increase profits. Typically only lasts a year or two until other markets catch up then it settles down. Just my opinion but I believe this is exactly the case happening now- if indeed supply was so tight and demand was so high, the oil companies would not be receiving record profit margins!

Originally Posted by mot250

It's my opinion that they are being too cheap to (and too heavily regulated) to build more refineries (and no one wants one in their own back yard). Even if oil was cheaper by the barrel, US refinery capacity is already maxed out to convert it to gas. And the capacity to do so keeps getting smaller as the existing refineries are left to disrepair and tend to blow up every so often.

If they spend the money to build new refineries or effectivly maintain the existing ones, they spend their profits and then as supply goes up with the extra refinery capacity, their profits go down due to supply and demand. It's a vicious cycle and we bare the worst of it.

But it won't make me give up my v-8 Mustang.

Originally Posted by mot250

It's my opinion that they are being too cheap to (and too heavily regulated) to build more refineries (and no one wants one in their own back yard). Even if oil was cheaper by the barrel, US refinery capacity is already maxed out to convert it to gas. And the capacity to do so keeps getting smaller as the existing refineries are left to disrepair and tend to blow up every so often.

If they spend the money to build new refineries or effectivly maintain the existing ones, they spend their profits and then as supply goes up with the extra refinery capacity, their profits go down due to supply and demand. It's a vicious cycle and we bare the worst of it.