[FoRK] Authoritative explanation of gas spike in 2007/8?

Reese howell.r at inkworkswell.com
Fri Oct 9 16:03:51 PDT 2009


Aaron Burt wrote:
> On Fri, Oct 09, 2009 at 02:45:55PM +0200, Jim Whitehead wrote:
>> Somewhat forgotten in the dramatic events that triggered this recession  
>> is the gas spike of 2007/8. Have any of you on this list run across an  
>> authoritative explanation of why this happened?
> 
> Best explanation I've heard:
> Ultra low sulfur Diesel fuel is refined from Light, Sweet crude oil, not
> other grades of crude oil.  Demand for ULS Diesel spiked due to a combo of
> regulatory changes and economic conditions.
> 
> That caused...
> 1. refineries to favour ULS Diesel over gasoline production, and
> 2. a spike in the price of the benchmark grade of crude oil (and
> only that grade).
> 
> #1 created a (minor?) shortage of gasoline, 

No. It all gets cracked out in the distillation tower, diesel is a
different, heavier molecular chain than gasoline. A spike in the
demand for ULS diesel would not cause a shortage of gasoline, there
would be an excess of it. That the spike was cause by Wall-Street-ish
speculation is the best and so far, only, plausible explanation I've
heard.

If anyone insists, I'll dig up links to a domestic news article that
outlines the Wall Street involvement and an Asia Times (IIRC) article
that predates it practically word-for-word, by about 9 months. Once
for the players, then again for the masses who are paying attention,
is how I read all of that.

Reese



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