Summary:

Light sweet crude is expensive because supply is very tight.

Gasoline is expensive because light sweet crude is expensive, and because there aren't currently enough refineries to handle the heavier grades which are in greater supply.

I did a search on "heavy sour" and "refinery" and hit this:

"Anyone who watches the oil market in any detail knows that the problem is not a shortage of crude oil. Indeed there is oversupply of certain types of crude oil – heavy, sour –and it is being sold at a discount. The problem lies in a shortage of refining capacity, which is owned predominantly by western multi-national and lies mainly in the industrialised countries."

http://www.khilafah.com/home/category.php?DocumentID=11864&TagID=1

For what it's worth, I think our problem is one of "transition" ... we have to transition from the light sweet crude because we can't find more of it fast enough.

I'm afraid the future will force us to use crappier oils as the good stuff gets used up.

I would like you to post a comment about a few things;

Saudis are at full capacity on pumping

How are our refinery's set up. ie: light or heavy crude.

Remember that approximately 10 % of our oil comes from the Saudis. Some from Iraq, Some from Venezuela, some from Kuwuat as a few other med east countries.

They have not done that, I think because they are not able. It is widely documented that existing wells etc. need to run at full blast in order to satisfy the current market.

It seems quite possible to me that there could also be a refinery "shortage" ... but here is the real contra-indicator to that: If we were short on refinerise, not oil, then oil would be cheap at the same time gas was expensive.

Given that crude oil and gasoline prices have risen together, that seems an excellent proof that this is an oil, and not a refinery, shortage.

There is some cross-over between these concerns though. Most of our refineries are set up for light sweet crude, and I believe that is what is in shortage. More of the world's crude suppliers are giving us heavier oils, which call for a different sort (and more expensive?) refinery.

So, it could be that the refinery shortage actually relates to the light sweet crude shortage, and the Saudis want more refineries ready to accept heavy sour oil.

It wouldn't surprise me if that was where your "no takers" comes from ... no takers currently for any more heavy sour crude ... the crappy stuff.

I have not heard or seen any denials of the Saudi oil availability from any US oil companies or the US Government. Have any of you?

It's not that I put so much trust in the Saudi Oil Minister, but lacking any word from the oil companies other than "Excuses" is better than what we are hearing.

Ont thing I learned a long time ago and most likely you also, is,

"MONEY TALKS" and while I do think that the Saudis are funding and supporting terrorists when it comes to business and making (Or stealing) a buck, the Saudis will be there to take it.

On top of that Mr. Ray Tillman attended the same oil meeting and if the oil was not available, then he surely would have debunked the Saudi Oil Minister. If the oil were not available, and Tillman did not say a word, then that makes him and Exxon Mobil a part of the untruth.

I am really shocked that there a lot of people here that uphold and make excuses for the oil companies while they are getting it stuck to them at the gas pumps. Unbelievable.

http://www.nytimes.com/2005/09/10/business/10nocera.html?ex=1128139200&en=e6ee0ac6e1d87c0c&ei=5070

http://www.mensnewsdaily.com/archive/k/king/2005/king091605.htm

I actually think we are near the end of cheap "light sweet crude" ... but there is more of the heavy stuff, and even more of the very-heavy (tar sands, etc.).

The interesting thing to see will be the degree we have to move to heavy and very-heavy sources, how fast we can move, and what the economic/environmental effects of that shift to heavy crudes will be.

Supply and Demand applies to increase crude prices when it appears that there is or will be a shortage, But

When there is an abundance or oil available, supply and demand do not apply, and,

Low crude inventories, ( the oil companies are not buying oil) are the reason for crude oil price increases so that inventories can be replenished and supply and demand are no longer a factor for pricing.

Make you wonder just what the next excuse will be for a price increase.

But, don't worry about it, the oil companies will think of something, you can be sure.