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Friday, August 06, 2004

Supply, demand, what's the diff?

This doesn't quite make sense:
LONDON (Reuters) - Oil prices hit record highs Friday, climbing close to $45, after a renewed threat to Russian oil major Yukos and a big refinery fire in the United States added to the strain on world supplies.
Imagine, if you will, if there were fires at every oil refinery in the world. (I'm sure both Osama and the Bush administration have thought about it, as they never stop thinking of ways to harm our country.) If you were a multi-billionaire oil speculator, would you rush out and buy all the oil you could, driving the price up? Of course not! Nobody would buy it from you until their refineries were repaired or rebuilt. The refinery fire may well drive up gasoline prices in the US, but by itself it would cause oil prices to go down.

On further reading: While Reuters calls it a "big" fire, it has rated surprisingly few news articles of its own. The one I did find says that it was a minor incident, the fire was quickly extinguished and that production was not affected.

On still further reading and thinking: There was a fire at this same BP refinery back in March, and the FBI was in a huge hurry to conclusively state that it was "not terrorism" after an exhaustive 45-minute investigation. And earlier this week there was another Texas City fire at a Marathon Ashland refinery. As far as I can tell, no one has bothered to claim that either that fire or the latest BP one were "not terrorism," but I wouldn't be surprised to hear someone in the Bush administration make that claim soon. Whether one or all of these fires were "terrorist" acts, I don't know. I'm just pretty sure that whatever the "authorities" conclude will be based much more on economics and politics than on high-quality investigative police work.