Oil is rising, Oil is rising, Oil is rising !!! But is it? The media has done a wonderful job of turning the word Oil into a one size fits all term. The fact is, when we hear that Oil is rising, what we are really hearing is that prices of Crude Oil Futures contracts based on West Texas Intermediate Crude are rising.

There are many other types of Oil in the world over and above the West Texas variety. In fact, a goodly amount of Oil in the world is what we call heavy oil which contains long, complicated molecular chains. This Oil requires specialized approaches to refining which can involve some environmental issues. But, if refined properly these environmental concerns can be mitigated. Right now there is a shortage of refining capacity in the USA to handle these heavier types of Oil. This explains why Iran and other Middle Eastern nations right now have tanker loads of heavy oil moored offshore. Nobody wants the stuff because there is a lack of refinery capacity for it.

But this is all changing. There are some planned upgrades to refineries set to take place in the USA right now. These changes will make way for an additional 1.1 million barrels a day of heavy oil to be processed. According to a recent article by journalist Shaun Polczer of Canwest News Service, this added capacity is equivalent to building 16 new refineries. The end result of these expansions will surely be an easing in price of gasoline and diesel fuel.

While news of these planned expansions sounds positive, it may be premature to celebrate, for heavy oil is set to take centre stage in Campaign 2008. Environmental groups supporting the Environmental Integrity Project (EIP) have set their sights on the notion that refining heavy oil may have negative consequences for the environment. Campaign 2008 will surely be a hard fought battle with McCain and Obama leaving no stone unturned in their search for voter support. Don't be surprised if the issue of refinery expansions takes a body slam as the wooing of voters reaches a fevered pitch. The result could be implementation of a low Carbon fuel standard which will only serve to solidify dependence on lighter grades of oil such as West Texas Intermediate. The addiction to expensive grades of Oil may prove harder to kick than we all expected. This story is far from over. Stay tuned…