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Tuesday, May 22, 2007

It's all about the refinery problem, but should it be?
You're hearing an awful lot about refinery problems and the ability of refineries to shove more expensive crude through the refinery system.
You're also hearing that demand and supply are in delicate balance and that inventories of gasoline remain low.
What you hear is all about what the markets want you to know and not about what they should be telling you. They've compromised the economy by taking a product like gasoline and increasing it incrementally to the point that it rises far ahead of the world inflation rate. It must be the only product in the world that can do that.
But, here we are at record prices, and Newfoundland and Labrador consumers will take another 3.6 cents a litre hit on Thursday morning, May 24th.
Hit the pumps again!
Hurts too...
What makes this one specially hard is the fact that the new price you'll see will be an all-time record outside of the couple of days in the aftermath of Hurricane Katrina. Last year saw a record $1.22.5 a litre. Thursday should show $1.23.4 or close to it.
What also hurts is the fact that heating and stove oils are set to increase, albeit just a couple of tenths up. Reality tells me that tis the season for pricing to head the other way for a winter commodity. It just ain't happenin'!...
What kills me about all this is that Big Oil has been long quoting the Nigeria situation explaining the need for the best crude oil the world. What they haven't explained is the fact that oil is so expensive when there is plenty of the cheaper type crudes out there. Not everything that is available out there has to be a West Texas Intermediate, although it would be nice. The reality of the markets are telling consumers that we can get by without the expensive stuff and so should you.
Remember, Big Oil...You're making record dollars in refining. We shouldn't have to be made to follow the piper on this one. You created the refinery breakdown problem when you didn't invest big money into refinery maintenance. You must have known this would be a problem in the future.
Or, was it the need for better returns for your shareholders that caused all this? The scenario: well, if we don't invest in our refineries, we get to save money. When they break down, we get to reap the benefits of a fuel shortage!
Funny...
For some reason, I just don't think that Big Oil had the consumer need at heart when they let that card slip from up the sleve.
Question is: what else have they got?
Regards,
George


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