8.9 Earthqauke in Japan: Huge Tsunami hits land
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03-16-2011, 12:33 PM
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Join Date: Mar 2008
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Originally Posted by
The simple answer is supply and demand. Notice I said crude prices fell after the tsunami, not gasoline prices.
Couple of factors at play here. Japan only has 5 refineries to turn crude into gasoline. 3 were knocked off line. Despite the fact that Japan will need less gasoline in the near future compared to the time frame prior to the earthquake, they'll still need more than they can refine. They'll need to get the gasoline from somewhere. Guess what, the western United States has gasoline. The Japanese are willing to pay top dollar for gasoline. Until supply and demand balances, the correct economic decision is to send all gasoline to Japan. (This is over simplified, as we can't teleport gasoline overseas- it takes time- but you get the point.) Thus gasoline prices rise while crude prices remain constant (or decline).
But then wouldn't Japan buy its gasoline from the supplier that can fill their demand at the lowest price?
I agree with you, we should send any or all available surpluses to Japan and sell it for whatever profit can be made but only if there is a profit to be made.
Then I would expect as all North American's have for the past several years for those profits to be returned to us by lowering gas prices at the pump, and that just hasn't happened.
I am not blaming anyone specifically by the way, there is enough blame to go around for all of us but it would exceptionally naive to think that the U.S. government and the petro/oil industry doesn't deserve more than the individual consumer in my opinion.
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