Apparently, there is more oil stockpiled and floating around on ships, than the refineries can handle.
There is no shortage of oil.
Refiners have either cut back or have not increased capacity, probably for all the reasons which are right for them.
The recent up-tick in oil prices has been blamed on speculators, who I really hope lose their shirts, and not on oil production.
The price of oil has continued to surge to reach a record high of more than $93 a barrel, although it fell back by about a dollar Tuesday.
The Qatari Energy Minister, Abdullah bin Hamad al-Attiyah, spoke even more bluntly about what he described as the futility of pumping more oil into the market to bring down prices.
“To increase by 500,000 or one million barrels, do you believe today it will bring back the price?” Attiyah asked. “I don’t think so,” he said, emphasizing his view that the price of oil had become almost wholly decoupled from supplies.
Financial players “lost a lot of money on real estate, shares and bonds, and then they jumped to commodities,” including oil, Attiyah said.
He also heaped responsibility for the high price on a shortage of refining capacity, which was creating unusually high demand for products like jet fuel and gasoline.
Attiyah also suggested that European governments in particular were too reluctant to lower their high taxes on oil for fear of losing precious revenues.
My guess is with all the talk about alternative fuels, little will be done to increase refining capacity here, and all we will see is an increase in price, not because of shortage, but because we are not using enough.
