Global Warming Examiner

Oils Well That Ends Well

Crack spreads are low and capacity utilization is low so we probably have enough current refining capacity. We are actually getting gasoline imports from Europe. They use a higher percentage of diesel and ship us their excess gasoline. This also causes diesel prices here to be higher.

The problem here is political. There are a lot of countries that for various reasons are not developing their oil resources. Saudi Arabia is looking longer term. Countries like Iran, Venezuela, Nigeria, Russia are all using their oil revenue to fund immediate economic needs without making investments that will pay off far in the future (greater than a few years.) Some countries like Mexico and Russia have nationalistic policies that prevent foreign investment in their oil industry. I posted an article on my web site talking about Mexico. They could run out of oil in 10 years. Pemex doesn't have the resources to develop new reserves. They get 40% of their national budget funded with oil. They will be hurt severely if they don't invest in new development. And the liberal congress in Mexico refuses to change their laws and even hold rallies to denounce the politicians who would 'exploit' and 'steal' their resources. Unfortunately, it also sounds a lot like our congress.

Many OPEC countries are experiencing or expecting decreases in future production. Nigeria just announced they expect their production to keep falling. There are not many countries that are increasing production.