Sure the oil companies can afford to build new refineries with the money they're making. Add to that the subsidies given to them by the new "energy bill". A new refinery is immensely expensive and take years to payoff, even at the current earnings rate.
The major oil companies are aware that world output of crude oil is peaking. They are also aware that demand for crude is expected to exceed supply by the fourth quarter of this year.
Basic economics tells us that when demand exceeds supply, price must rise happened in the early 70's. Crude oil is up 40% from 1 year ago. Terror premium my butt.
The question is not if, but when? At what price for gasoline will we begin to see demand destruction? Not yet as demand for gasoline is up on the order of 2% over last year.
They're not building new refineries (even though US govt offered unused military bases for such) becuase they know the investment will never be paid off with the peaking of crude oil supplies.
For further evidence of the majors acknowleding peak oil extraction:
www.willyoujoinus.com a site sponsored by Chevron. Take a look at BP's web presence, or Exxon-Mobil shareholders' report. Its all there in black and white.
