Got Bored

[Doug]

I got bored yesterday so I made this chart

http://www.oilandgastruths.com

It made me so angry that I actually felt like I needed to put it up on the net so other people can see what is really going on. The sad part is we just kind of have to take it.

[Chris]

Umm... gasoline and oil don't always trade in tandem.

The reason recently gas prices haven't match oil is because hurricanes forced the shutdown of refineries on the gulf coast. Oil can be as cheap as you want, without refining capacity you can't do diddly with it. For instance do you know Iran imports gasoline? seriously, they do, because they don't have the refining capacity to refine their own oil.

Other times when you see a disconnect will be when refineries get shut down for maintenance, or there are accidents, like back in July I think one had a big fire. But the reason you see that difference at the end is purely because of refining shortages, nothing untoward there but some bad weather. Of course if we had built new refineries in the past 30 years maybe we wouldn't get such fluctuations every time one goes offline. It'd be a nice to have a little excess capacity.

http://www.ogj.com/display_article/339491/7/ONART/none/GenIn/1/Hurricane-Ike-idles-21-of-US-refining-capacity/
http://www.latimes.com/business/la-fi-oilstorm1-2008sep01,0,581773.story

Gustav shut some down, then Ike shut down more. Hence, you get higher gas prices. Once this shortage works it's way out of the system, assuming no other disruptions, you'll see gas prices fall and trade in tandem with oil more closely again.