Quoth another “Smarty” (who seems to dare me to use scare quotes):
We have too little refinery capacity, and we make it worse by having so many custom blends. Increasing refi capacity would help.
Let’s see how this stands up to the most trivial economic examination.
If high product prices were due to a shortage of refining capacity, then:
1. refining margins (the “crack spread”) would be high and
2. the price of the inputs would be depressed.
That’s “Smarty’s” fantasy world. In the real world, the “crack spread” is down to $13/barrel and the price of crude sets new records (in US$) almost daily. His “solution” makes about as much sense for dealing with oil shortages as buying a bigger truck.
Drilling domestically would help as well. If it wasn’t worth it, then why is Cuba drilling not far from they keys?
When the USA’s per-capita oil consumption is approaching the level of Cuba’s [1], we won’t need imports even without much new drilling [2].
Cuba has extremely low oil consumption, and can become an exporter with relatively little production. This is a very good time to be an exporter. It is also a very bad time to be an importer, and the USA’s import situation cannot be fixed by domestic production; most of the changes have to be on the demand side.
[1] Cuba’s oil consumption is ~170,000 bbl/day, which is about 5.5 bbl/capita/yr.
[2] The USA pumps about 6.9 million bbl/day, or about 8.4 bbl/capita/yr. However, the USA consumes about 3 times that much.
