Typical Short-term Corporate Thinking Enhances Gas Pain

Post from Leadership Turn Image credit: JOE M500

I have gas pains, you have gas pains and so we rant.

Rants don’t alleviate gas pain, but they do relieve pressure.

We rant about crude prices and the mean oil producing countries that are more concerned with their own internal economy than with being nice and increasing production.

We rant about the oil companies and accuse them of manipulating prices.

Not that our rants aren’t mostly true, but…

There is something else going on.

Alkylate—or the lack of it.

‘The alkylate shortage has become the most important driver of summer gas prices, said Doug Leggate, an analyst at Citigroup Global Markets. “Supply of [alkylate] will set the price of summer gasoline – not inventory levels.”

What’s alkylate I hear (most) of you ask.

“…a little-known and expensive gasoline additive that some in the industry are calling “liquid gold.” It has become a must-have ingredient since refiners stopped using MTBE two years ago…”

Where does it come from?

“Oil companies deny they are purposely limiting production of alkylate, which like gasoline, jet fuel, and asphalt is a byproduct of the refining process. But only recently have some started studying how they can boost output… “

Of course the effort is recent, planning ahead, AKA, strategic thinking, goes against accepted business practice.

Should the oil companies have seen this coming?

Be sure to check out another other Fun Friday post at Talk Stock Trading

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