Understanding the Issues 2008: Energy

[FRPLG]

Originally Posted by 12thMan

I don't know if it's a Democratic thing...or even a Republican for that matter. But I'll say for one, and take this how you want, but our occupation in Iraq has most definitely played a role in the price of oil and it's trickle down affect on gas prices.

Yeah it has nothing to do with Dems or Reps but it also has little to do with the war in Iraq. I dislike the war as much as the next person but let's not buy into the political babble about that.

Crude oil prices are what they are because:

OPEC has decided that's what they are going to cost. OPEC is a cartel which means they collude to set a price. They usually actually use some metrics to set this price but by no means is it a true market price. The types of things that drive their raising prices are:

Increased demand in Asia. With the increase in demand from China and India(Growing 10%a year for 6 years now) the needed crude oil has risen 40% in a decade.

Couple that with an extreme loss of production from Venzuela and the supply and demand intersection(price) has gone way up.

Other factors are increased environmental regulations, especially in the summer months. Deman in the US skyrockets in the summer months because of AC but prices go up even further because the blends needed per regulations mean greater production costs. Plus the fact that twice a year refineries have to retrofit to mix the proper blends.

On top of all that(crude oil rpices in general) our refinery capacity is still hurting after the Summer of '06's hurricane hell trip that really killed that facet of the industry. Even before Katrina I think we were down capacity wise like 50%. Katrina just put the last 10 nails in the coffin.