Thursday, May 08, 2008

$200 per barrel for oil by the end of the year?

From the total logic failure department, we have this Bloomberg article attributing today's record $124 per barrel price to insufficient refinery capacity in the US. Now certainly insufficient refinery capacity will tend to raise the price of gasoline at the pump, but it will also inhibit crude oil purchases and have a net downward pressure on crude oil prices. Increases in crude oil prices are thus being driven by other factors outside of the US.

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