Oil industry restricts supply, analysis shows

[kurth]

Oil industry restricts supply, analysis shows
By JEFF DONN
ASSOCIATED PRESS
11/26/2006

BAKERSFIELD, Calif. - An Associated Press analysis, based on years of government data, suggests oil companies have been crimping supplies for years. Tighter supplies tend to drive up prices. The findings support a conclusion already reached by many motorists. The analysis, based on data from the U.S. Energy Information Administration, indicates the industry slacked off supplying oil and gasoline during the prolonged price boom between early 1999 and last summer, when prices began to fall.

The industry counters that it has worked hard to meet untiring demand. It faults output quotas set by Mideast oil powers, global competition for oil from booming economies like China's, and such domestic problems as depleting wells, clean-air rules and hurricanes. Yet the AP analysis found evidence of at least an underwhelming industry performance in supplying the domestic market, when profits should have made investment capital plentiful:

-During the 1999-2006 price boom, the industry drilled an average of 7 percent fewer wells monthly than in the seven preceding years of low, stable prices.
- The national supply of unrefined oil, including imports, grew an average of only 6 percent during the high-priced years, down from 14 percent during the previous span.
- The gasoline supply expanded by only 10 percent from 1999 to 2006, down from 15 percent in the earlier period.

Fifty-five percent of Americans believe gas prices are high because oil companies manipulate them, a Pew Research Center poll found in October. The city of Bakersfield offers a case in point of what critics don't like about the industry. Here in this California landscape more evocative of Texas, oil wells dip nonstop amid the tumbleweed - or even into the asphalt of a parking lot. That's why the rumor sounded so wrong here in the lower San Joaquin Valley, where petroleum has gushed up more riches than the whole gold rush. Why would Shell Oil Co. simply close its Bakersfield refinery? Why scrap a profit maker? The rumor seemed to make no sense. Yet it was true...

http://www.buffalonews.com/editorial/20061126/1013726.asp

[alfredo]

1. when corporatist say that it was environmentalist that has

hampered the building of refineries, I respond by telling them that the industry declared a moratorium on building new refineries to keep supply tight and prices high. I used to have an article about that.

[DeepModem Mom]

2. K&R

[Raster]

3. Now take that same data and correlate supply and prices

with election cycles. The Texas-American Petroleum is overwhelmingly white, rich, conservative and rethuglican.

[Squatch]

4. Well...DUH!!

A company's objective is NOT to sell its product at the lowest price possible.

[Greyhound]

5. So how many times will this have to come out for the corporatists

to finally see that their fantasy is just that?