Why Oil Prices Skyrocketed
Posted by keelynet on June 22, 2008
He who pays most, receives.
“Global consumption is spiking. An average of 86 million barrels of oil are guzzled per day across the globe, according to the U.S. Energy Information Administration, up from 74 million barrels 10 years ago. World demand for oil is expected to increase by 37 percent to a staggering 118 million barrels per day by 2030, the agency estimates. Assuming, that is, there’s enough to go around. By William Fisher’s reckoning, rising oil prices are more likely due to an old-fashioned case of supply and demand — as well as the faltering U.S. dollar. “We’ve just had a red-hot increase in demand in the emerging economies of Asia, particularly China and India,” he said. “The other contributor is the weakening value of the dollar compared with the Euro, since oil is priced and sold in dollars.” A third offender: commodity speculation. “When you see a commodity like oil that will vary by 2 to 3 percent of its value in a day’s time, you suspect that there’s some speculation that’s going on,” Fisher said. “And I’m not saying it’s a nasty word — people speculate in margins all the time — but that would, in my view, have some secondary role.” David Cole, chairman of the non-profit Center for Automotive Research says, “We have failed to develop our resources due to the inability of Congress to permit drilling in high-probability petroleum regions,” he said, arguing that the United States has had an “absurd energy policy” for years. “The only thing Congress has done over the years is promote the development of corn ethanol, which doesn’t make any sense because it has very low energy potential,” Cole said. “I think our broad energy capability is still very substantial, but we really need to bridge the gap between our existing resources and alternative technologies, including cellulosic biofuels and lithium batteries.” – Source
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