"Chuck Gould" wrote in message
oups.com...
On May 8, 5:40?am, animal05 wrote:

You also have to factor in the supply issue. Price is a way of
manipulating demand. If price remained constant and supply dropped
below demand, shortages and/or outages would occur. Lets face it, in a
capitalistic market, if someone else can supply more of the same goods
for slightly less, making more overall profit, they will. My
understanding is that currently there is a shortage of refined product,
due to some refineries either off line or retooling. Part of the
problem is the hundreds of different formulas required by the feds
around the country.

The rules of a capitalistic market do not apply when the raw materials
are controlled by an oligopoly. There is no opportunity for new
players to enter the field and supply superior or cheaper refined
products. Even *if* there were a new and independent refinery built,
the operators would need to rely on their competitors for raw
materials....not a good business model in any industry.

There is a shortage of refined product because world demand has
increased to the point where there is no longer any surplus supply.
Every drop will sell. By choosing to "retool and repair" refineries
during the onset of the peak demand months, the oil companies short
the market in some economies and drive prices up dramatically in
response. The normal risk of shorting the market is that your
competitor will increase supply to meet the demand, which could cost
you relationships with your customers and leave you with unsold
product.

When any member of an oligopoly shorts the market, it benefits the
other members as well. There is no need for outright, formal, illegal
"collusion". Because worldwide demand exceeds supply, there is no risk
of a competitor ramping up production to steal your customers- you
will find somebody, somewhere, willing to pay whatever you want to
charge. If that attitude disrupts economies or creates hardships for
people who have previously relied on a predictable supply of a product
at a predictable price that's too fricking bad. The oil companies are
in business to make a profit......period.

It goes without saying that boating will suffer, probably very badly,
as fuel costs
go higher and higher every year. That's been the trend for three
years, and any realistic person would have to assume that (excuses
about refineries, floods, hurricanes, etc aside) it's now the basic
business formula for BIGOIL. Few people are going to buy any
recreational vessel or vehicle that needs to consume enormous
quantities of petroleum products to operate, and who can blame them?
Tough as it is when the costs are $4-5 at the fuel dock, imagine what
would happen if fuel goes to $6-7, or $7-8? The volatility of fuel
prices and the very real possibility that they could be double what
they are now in just a couple of years has to discourage any
reasonable person from "investing" a couple of hundred thousand in a
boat, or taking out a 15-year marine mortgage to make payments for
one.

I think I can see where we're going on a few fronts over the next few
to several years, and I wish the picture were slightly prettier from
here. We're entering an era of fewer options for all but the folks in
the very highest income brackets, as well as when a flock of
consequences begin coming home to roost.

Most of the retooling of refineries is a government requirement. Going from
Winter to Summer Blend. When California had real shortages a couple of
years ago, we could not get fuel from Arizona, that had a surplus, because
it did not meet the Calif. State blend requirements. And the refineries
were required to add MTBE. The stuff ate up seals at an extreme rate. One
of the reasons there were more refinery fires.