Senate and Offshore Drilling

I read this news article this morning and was glad to hear that our legislators are moving in the right direction for a change.

If we start drilling for oil and are able to draw a significant amount from them we could see the price per barrel begin to decrease.

However the real concern and the biggest item that have gas prices so high is capacity. Capacity is the amount of space a refiner has to convert crude oil into other products, most importantly gas!

Unfortunately most refineries are working well beyond their capacity and are in need of expansion. If they are unable to expand their ability to convert crude to gas then we will continue to see gas prices at high levels.

Economics tells us the best way to lower prices is to increase supply…but if there is a constraint to the flow of the supply the prices will remain high until the flow can be increased.

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