Friday, December 6, 2013

Diamonds still costlier than water

Maybe it was the discovery of that 100 MPG carburetor that Detroit didn't want to put on their cars? Probably not, but our old friend Supply and Demand;
The U.S. Gulf Coast—home to the world's largest concentration of petroleum refineries—is suddenly awash in crude oil.
So much high-quality U.S. oil is flowing into the area that the price of crude there has dropped sharply in the past few weeks and is no longer in sync with global prices.
I guess those evil oil company executives who set the price of gasoline in a secret lair took a long Thanksgiving week-end.

However, we don't expect Russell Gold and Nicole Friedman to be awarded a Nobel Prize in economics any time soon;
The ramifications could be far-reaching, including lower gasoline prices for American drivers, rising profits for refineries and growing political pressure on Congress to allow oil exports. But the glut could also hurt the very companies that helped create it: independent drillers, who have reversed years of declining U.S. energy production but face lower prices for their product. 
The ramifications of the Laws of Supply and Demand are ALWAYS far-reaching. Which is why they are Laws and not theories.

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