Big Oily Dragon

I've been thinking about this for a while. It's not terribly complicated, so why has it taken me so long to put this before the public. Maybe no one wants to admit that they know when they are being screwed, and can't do anything about it.

The electrical production industry is a government regulated monopoly. That means we have no competition in our area, but we must perform in a reasonable, reliable, economical fashion. All our endeavors are auditable by the regulatory body. Electricity in the form of AC current can't be stored, the supply must meet the demand almost exactly. We can, and do cross the buy/sell line at the tie breakers every ten minuets. We analyze and schedule everything we do to ensure we can meet demand the year round. We can't have "shortages". If we have a lack of generation, your lights go out. Therefore we schedule our no production times so we can minimize our down time and try to limit it to periods when demand can be met by other means.

A like situation exists with the petroleum industry. They, like us, have large industrial complexes that require maintenance and upgrades on a regular basis. Therein lies the problem. This is known, or predictable, data. The industry KNOWS when demand will change from one product to another. They KNOW the equipment that will be required to be converted for different heating/fuel oils. All this can be scheduled and incentives put in place to ensure employee/ contractor efforts to keep the products flowing. Why is it not being done? One ready answer is a shortage drives prices up.

That’s right, if you do a poor job of predictive analysis, or just don't schedule anything, when the facility stops working, the price will go up.

The first thing that comes to mind is, if you are broke then you cant sell a product that you can't make. That's true, however, the shortage is a percentage of production, not a total halt.

The situation that comes to mind is the conspiracy theorists favorite, create a shortage, and reap the profits, keep the supply just below demand and keep the public conditioned to higher prices. I don't think any one can say we haven't been conditioned, when we look at any price below three dollars a gallon, and think it's a bargin.

If someone is creating a shortage, or doing some poor scheduling, put the word out and let some market forces go to work. I wouldn't buy from someone I know is trying to fleece me. I don't think there is collusion among CEO's in the petro world, but it's not impossible. I think if there were price fixing going on, someone would talk.

I think they just don't care, so they just let it break as it will. In my business there is a lot of discussion about "if it ain't broke, don't fix it." We call it a "fossil mentality". Really old school, we have learned the hard way to fix the important stuff when the unit is off line. If there is a culture of "run it 'till it breaks" then the additive equipment failures will add up to longer down times.

The point? There is nothing we do , that they can't do. Lets have some transparency and oversight of the petroleum industry.