Why the OPEC can't increase production...

One of the big issues going around everywhere is the high price of Oil and why doesn't OPEC increase production... and this will drop oil prices. The sad fact is that it doesn't work that way:
  1. Most of the Opec countries are at near-maximum capacity currently. They can increase production in small amounts but at the expense of downtimes etc for facilities... without those small downtimes.. the oil producers end up with bigger problems.
  2. Many of the mid-east OPEC companies do not sell the crude US refineries like. US refineries like 'sweet' crude that Texas, Mexico and Venezuela produce. This is the oil that is at ~125.00 per barrel. The price for the oil that Saudia Arabia, Iran, etc sell is mostly sour which takes longer to process and clean. The standard 'Sour' grade is around 100.00 per barrel with some lower Sour's not selling at 80.00. [The cost of removing the sulfur and other deposits seems to be over $40.00/barrel for these 'grades'.]
  3. Refineries have been rebuilt over the last couple of decades to run 'cleaner' and want the lighter stuff. They are running near capacity in the US and would need down time to change to heavier crude oils. [This is also one of the reasons for higher diesel prices.. more of the refineries are being used to make 3 grades of gasoline and less for diesel.]
  4. One of the things that goes against oil tapping in the Alaskan refuge is that the oil there looks to be mostly heavy sour oil like other parts of the north slope. This oil even if it were as large as the Saudi fields would not help the price of the oil that is most used.
Actually one of the things that would cut gas prices was to remove the need for mid-grade gasoline. Most cars run well on lowtest or on high-test. The mid-test supposedly takes up 1/5 of refining capacity which could be converted to low-test. This would boost domestic gas production or diesel production which would lower prices. I expect that in the case of gas prices going north of US$4.00-$4.50 that this will go through congress and states will push for 55 mph speed limits as that would reduce consumption enough to lower prices to $4.00 stage.

Anyway... this is what happens when you give me a napkin, a pen, and a meeting I didn't need to be in :).