Jeff Bingaman: “robust demand growth has finally caught up to eliminate that excess capacity, both in the United States and in Europe.…”

“robust demand growth has finally caught up to eliminate that excess capacity, both in the United States and in Europe. Clearly, domestic refining capacity is a significant concern that needs to be addressed, but if near-term crude prices come down enough--as they have started to since the announcement to swap oil from the reserve--the underutilized refining capacity in Asia and the Caribbean could be utilized to increase the distillate stocks in the world market. There are many political and economic factors beyond the control of the Congress and the administration that drive OPEC decisions. To a substantial extent, the price of oil will be driven by world market factors beyond our control. Natural gas, on the other hand, is largely sold in the North American market. While there is no quick or easy fix, we need to assess the impacts of our current policies on natural gas and on oil development during very low world oil price periods to avoid these boom-and-bust cycles in the future. No one wants to go back to the days of regulation with gasoline lines and natural gas shortages, but we do need to determine where there are market inefficiencies and market failures that cause this extreme volatility in product stocks and prices. One of the major problems in the crude oil market is uncertainty about actual global consumption and production until months after the fact.”