cheaper oil yet more expensive gas

15 02 2009

You might’ve heard in the news that crude oil has been getting cheaper for a while.  In fact, it just hit its lowest point of the year, under $34 a barrel.  Yet as you’ve probably noticed, gas prices are steadily climbing higher.  This sounds crazy, right?  Here’s an explanation why, although it’s still not going to make you feel better.

Basically, because of the recession, there’s a surplus of oil that was drilled here in America, so it’s much cheaper than from the Middle East.  And the value of crude oil is determined by oil from West Texas.  But there’s no pipeline from West Texas to major oil refineries, so the gas companies aren’t using American oil to make their gasoline with.  And they predict gas will be over $2.50 per gallon by Spring.

The article asks why shouldn’t we build more pipelines from West Texas, where the oil is coming from?  Granted, that might not make economic sense.  But why hasn’t someone built a refinery IN West Texas, where all the oil is?  I don’t get it…

Another rumored theory I’ve heard is that the major oil refineries are cutting production, since there’s less demand.  That way there won’t be too much gasoline, so prices won’t keep going lower.  I haven’t heard proof of this, but I don’t have a hard time believing it.  Exxon-Mobil and the like have to keep making their record profits, even while the rest of us are in a recession.  And if their greed makes the budgets tighter for millions of Americans, they don’t care at all…

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One response

18 02 2009
Oil Man

Oil is a precious resource so the explanation for our oil industry is to conserve our valuable resource so we can continue to reap it’s rewards.

I like oil. In my food, in my car, in my private jet. Oil is great. Imagine a world without oil. We still be in horsecarts and snail-mail deliveries. Anyway, oil companies are using the profits everyone hates to find ways to stay relevant.

Afterall, we know the end is near for oil and we still want to corner the market on something. if not oil, then we want to be the masters of solar energy, or wind energy, or geothermal. For our dominance is your gain. Yes, we will make millions, I mean, billions of dollars regardless of the outcome. Don’t be spiteful, take a look at your stock portfolio, odds are you have a piece of our gigantic pie tucked away. When we make money, you make money.

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