Germany Blames US for Soaring Oil Prices

Zaman.com ^ | 9/1/2005 | Staff Writers

[Dog Gone]

Utterly stupid. Refining capacity affects the price of gasoline. It has nothing to do with the price of oil.

If anything our inability to convert it to gasoline should make the price of oil drop.

But the Germans haven't been saying many intelligent things lately. Weird, they used to be bright.

[elbucko]

The enviornmental and endangered species laws produce only one result.. If you want to build a factory of any kind, you can do it a lot better and a lot cheaper overseas.

I agree.

[hermgem]

It's always the Germans that blame the U.S. for their very own deteriorating business climate.
Now it's U.S. refineries that did the Germans in.
Question: How many oil companies does Germany have, how many oil companies and refineries operate within their borders? Answer: zilch.
a) Where is the German contribution as the third largest world economy to stimulate worldwide growth:
Answer: they're miring in recession for the last six years.
Just like during their previous election when they called Bush a Hitler (Germans of all people) they dig deep into their German souls and go anti U.S.A.
Win these elections for the left at any cost, and besides would anybody treat their best customer in such a shabby manner?

[Minus_The_Bear]

Remind we again why didn't let the USSR destroy these spineless cretins in the gulags?

[daybreakcoming]

Can we please start bombing Germany again? These pukes with their what, 20% unemployment rate are trying to blame the US for their own problems.
Let's see: yesterday one of their "ministers" blamed Bush for the climate which "caused the hurricane". Today another minister blah blah. Can't wait until tomorrow for yet another minister.

[JeffersonRepublic.com]

"Indicating that Hurricane Katrina hitting US oil production facilities and refineries would deteriorate the situation, Clement said America would demand more oil from Europe"

At least Clement understands that the big dog eats first, so he best be shipping oil to the US.

[mcg1969]

Actually, they're right. Thanks to our envirowhackos, our refinery capacity is far below where it ought to be.

[Archidamus]

I agree that building more refineries here would be a good thing for our country, I just do not understand from an economics standpoint how the argument can be made that lack of refineries causes the price of crude to go up.

[Grampa Dave]

"The term "hedge" fund is used for the activity of rich investors who take their money of hundreds of thousands of dollars from one market to another in order to accumulate interests with extraordinary profits. The most famous example of the investment companies dealing with these types of funds are the companies owned by famous American business tycoon George Soros. "

Duh! We need some investigative reporters to track how oil prices excelerated after $oreA$$ stopped floating the Euro just before the election. He probably took those profits to the oil futures market to drive up the cost of oil.

[NMR Guy]

Can someone please explain why lack of refining capacity would raise the price of crude oil? Seriously, is there some part of the equation that I'm missing? I keep hearing this over and over again.

It seems that if the problem truly is supply and demand for the raw material (i.e. crude oil), then more refining capacity would just create the possibility of more crude oil consumption, thereby raising the price of crude oil.

[wilmington2]

He is 100% right . No new refinery has been built since 1976 and many small ones have been closed. A new one should be built in the Northeast under some national security exemption from all EPA rules and with lawsuit exemption and it ought to be managed by one of the major oil cos. under a management contract. It should auctioned by the gov't. after it is built. Particularily, it should be built in Sen Schummer's backyard as a slap in the face to this nothing of a man who always calls for releasing oil from the gov't reserves but nothing to cure the problem which is a refinery in the northeast.

[mark502inf]

The US is partly responsible for the high oil prices as it has not expanded its refinery capacity for a long time

True. And it is the laws and regulations passed at the federal level--as lobbied for by our modern-day Luddites in the enviro movement--that make it virtually impossible ot build new refineries.

[A CA Guy]

If you can't convert the oil to gas fast enough, then the value of what is available rises.

If the refineries are down, supply is more in demand when not as available and the prices rise.

[Sam Gamgee]

Yes, but derivatives go well beyond oil futures. A derivative crash would likely take down most large financial institutions as well – who would then be bailed out at the taxpayer expense.

I do see speculation – but only from $67 to $70. Oil prices could hit $80 and still be reasonably price IMHO. Daily production is maxed out. Although in the intermediate term I think we will head back to $59 fairly quickly.

You also have to keep in mind there are forces with bigger money who would rather see a lower oil price – the US government could easily defeat any big money playing the speculation game and I am sure they are already at it. My point is manipulation can go both ways

[Sam Gamgee]

Germany is a has been.

[BeHoldAPaleHorse]

"The U.S. government does not own the oil refineries. The oil companies do. Our government cannot dictate to companies and force them to make huge capital investments."

They can, however, make it difficult to impossible to make those capital investments in a profitable manner.

[Sam Gamgee]

Refining capacity will affect the price of gas at the pump. The media confuses 2 separate markets. Most people assume gas prices and oil prices should move lock in step. But gas prices can move up even with oil stationary – it usually happens every summer. Gas is traded on a futures market. Of course the price bid on the market is affected by the price of oil ,but there are also other factors involved.

[Archidamus]

"If you can't convert the oil to gas fast enough, then the value of what is available rises."

That is not the way supply and demand works. If you have no use for something the price goes down. If you cannot use the oil to make gas because there is not enough refinery capacity, the price of oil goes down. There will be an excess supply of oil.

Just imagine that we suddenly had half the refinery capacity. The price of crude oil would drop, because there would be more people wanting to sell the oil than there would be people wanting to buy it. At the same time, the cost of gasoline would skyrocket, because the supply of gas would be cut in half but people would be wanting to buy just as much gas as ever.

Supply demand curves are pretty simple. Look it up in an elementary economics textbook.

[Archidamus]

"He is 100% right."

No, he is 100% wrong. Lack of refinery capacity would make the cost of gas go up, but it would make the cost of crude decline. Basic economics.

[A CA Guy]

Everyone has cars and they use gas, so if capacity is cut in half, you'll get the Jimmy Carter gas lines with people waiting to get the gas, and it will cost a lot.