"OlBlueEyes" wrote in message
...
"Jeff Rigby" wrote in
news

"OlBlueEyes" wrote in message
...
"Jeff Rigby" wrote in
:

I would have thought that the price would drop for world oil but gas
prices here would increase.

Uh... lower supply means higher prices.

Since we can't import oil to the port in Louisiana that should mean
lower demand for oil on the world market since we can't import oil
for our demand.

This statement makes no sense at all.

Given that the demand for oil determines it's price. IF you take our
imports out of the equation there should be less demand on world oil
and it's price should drop.

Most of the oil for the US is imported thru New Orleans.

A great argument for eliminating the "single point of failure" by building
more refineries and pursuing more avenues of exploration.

If we can't
import it, we won't buy it and there should be less demand on world
oil.

Demand is determined at the end user level. For oil the end user is
not the refinery, but the commuter filling his car, the lawn service owner
filling his commercial mowers, etc. The refinery is just one link in the
chain from the raw material (crude oil coming out of the ground/ocean) to
the end user. Taking refineries offline does not decrease demand. To the
contrary, any break in the chain of delivery puts additional stresses on a
market. Those stresses are both real (refinery capacity has been
decreased) and perceived (consumers fear a coming shortage and make a run
on gas).

As another illustration, say longshoremen who unload widgets at a dock go
on strike. Demand at the end user level hasn't changed. Supply (the
number of widgets being manufactured at the offshore factory) hasn't
changed. But the price of widgets will go up because the delivery chain
has been broken.

This is why prices are behaving as they are, and why prices ALWAYS rise in
any "crisis" situation. People who complain about $500 generators selling
for $3,000 or $5 plywood boards selling for $25 don't understand basic
economics. There aren't enough generators or plywood boards for everyone,
so prices self-regulate.

Isn't the poster you are responding to saying that we can't import oil
through New Orleans. It seems your response is addressing refineries when
he is addressing an inability to import. I think an interesting question
would be how much refined oil do we export from New Orleans in which case
the shut down would effect world supply.

On Thu, 01 Sep 2005 15:49:13 GMT, "Bryan"
wrote:


"OlBlueEyes" wrote in message
...
"Jeff Rigby" wrote in
news

"OlBlueEyes" wrote in message
...
"Jeff Rigby" wrote in
:

I would have thought that the price would drop for world oil but gas
prices here would increase.

Uh... lower supply means higher prices.

Since we can't import oil to the port in Louisiana that should mean
lower demand for oil on the world market since we can't import oil
for our demand.

This statement makes no sense at all.

Given that the demand for oil determines it's price. IF you take our
imports out of the equation there should be less demand on world oil
and it's price should drop.

Most of the oil for the US is imported thru New Orleans.

A great argument for eliminating the "single point of failure" by building
more refineries and pursuing more avenues of exploration.

If we can't
import it, we won't buy it and there should be less demand on world
oil.

Demand is determined at the end user level. For oil the end user is
not the refinery, but the commuter filling his car, the lawn service owner
filling his commercial mowers, etc. The refinery is just one link in the
chain from the raw material (crude oil coming out of the ground/ocean) to
the end user. Taking refineries offline does not decrease demand. To the
contrary, any break in the chain of delivery puts additional stresses on a
market. Those stresses are both real (refinery capacity has been
decreased) and perceived (consumers fear a coming shortage and make a run
on gas).

As another illustration, say longshoremen who unload widgets at a dock go
on strike. Demand at the end user level hasn't changed. Supply (the
number of widgets being manufactured at the offshore factory) hasn't
changed. But the price of widgets will go up because the delivery chain
has been broken.

This is why prices are behaving as they are, and why prices ALWAYS rise in
any "crisis" situation. People who complain about $500 generators selling
for $3,000 or $5 plywood boards selling for $25 don't understand basic
economics. There aren't enough generators or plywood boards for everyone,
so prices self-regulate.

Isn't the poster you are responding to saying that we can't import oil
through New Orleans. It seems your response is addressing refineries when
he is addressing an inability to import. I think an interesting question
would be how much refined oil do we export from New Orleans in which case
the shut down would effect world supply.

It seems to me that we will be importing refined products at ports
other than New Orleans (and other devestated southern areas) in order
to make up for refinery production or southern pipeline supplies.
This will clearly impact the rest of the world. We have the ability to
get oil and oil products to the vast majority of the US by alternative
means, therefore our loss of oil production and our loss of refinery
production as well as our loss of southern pipeline transport capacity
has an effect on supplies throughout the world as supplies are shifted
to those willing to pay the most - as it should be.

Dave Hall