From: black.hole.4.spam{at}gmail.com (Don Hills)

In article , "Geo"
 wrote:
>
>More crap stories. Here's a new one developing, coal prices going up because
>so many mines in the US are down for "maintenance"..
>
>We have more coal than we could ever use yet it's in short supply right now.
>Gee how did that happen?

You're in the IT industry, you had a good example of how it happens some
years back. Remember the memory shortage, when prices reached silly levels?

Memory was scarce and expensive because the special epoxy resin used to
encapsulate the chips was in short supply.

The epoxy was in short supply because one of only two plants in the world
making the epoxy burnt down.

There were only two plants making the epoxy because there wasn't enough
demand (and profit margin) to make a third plant economic.


Now apply that to both refined petroleum and mined coal.

I'll spell it out...

Both products are marginal profit items. Investment in refineries and
mining equipment is therefore kept to an absolute minimum to keep costs
low. Production capability is carefully matched to demand. You cannot make
a profit in oil or coal if you have production capacity lying idle.

So for both, there isn't enough production (refinery, mining) capacity
available to handle surges in demand or more than the usual number of
refineries / mines offline due to unforeseen circumstances.

--
Don Hills    (dmhills at attglobaldotnet)     Wellington, New Zealand
"New interface closely resembles Presentation Manager,
 preparing you for the wonders of OS/2!"
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