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Originally Posted by cyrnel
I'm talking about Katrina. Why would we need to import more crude and therefore affect global prices, which is what ryfo was suggesting? The reality is Katrina has temporarily reduced our consumption by taking people off the roads and slowing the pipelines. Our refined goods demand is way up, due to fear and reduced supply but how does that affect the crude market?
Maybe we need other sources. Are other people outside the U.S. being told Katrina is affecting their gas prices?
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Simple explanation on the BBC news earlier this evening.
It works like this.
Supply in the US fell through the floor the other day.
So demand went up.
So prices rise.
Right now the highest cost (pre-tax) for gasoline is in the US - it's only so cheap there because you have so little tax on it.
Once the value of gasoline in the US = the value in Europe + the cost of shipping it across the atlantic, the Oil companies will make more profit by selling what they have in the US.
That kills supply in Europe.
Which causes us to have a price rise.
This will see-saw back and forth between Europe and the States (and all other global markets) regardless of where the gas came from.
In fact, if the board of the oil corps didn't ship it to the US, the shareholders would be expected to boot them out for not "maximising shareholder value".
The fact is that no economy in the world is isolated from the effects of global markets, no matter what Bush says.