June 28, 2008 by Tara
I read oil price has touch a new record again, $ 141. I think, this is not the last record. We just wait for the new record again, again and again. And, I think it will lead to a BIG DISASTER on the world. But I don’t know, what kind of disaster it will be.
I have read a lot of explanation about oil price hike. Below is the most rationale explanation I can accept :
– There is no high jump on oil consumption. Yes, consumption is growth. But consumption growth still on a normal curve, while price hike is exponential.
– There is no reduce on production rate. There is a threat on security by Israel-Iran (Iran nuclear case), there is a threat on Niger (or other country in Africa? CMIIW) oil production by a rebel. But the point is, we have through years on oil issue (Iraq war, Venezuela, etc), and so far, there is only a bit oil price movement (compare with current volatile price).
Then, there is no unbalanced oil consumption-production!
Then, why oil price continue to hike?
I believe, this is a consequence of our economic system. Previously we have see financial disaster on subprime mortgage. It lead to a fall of prestigious financial company. Billion (or trillion?) dollar has lost. After this, flow of money move from finance market to oil market. Right now, only 25% (or 20%?) is actual transaction. The rest is only paper transaction. And this is that lead to oil hike price!
Sorry that I’m not providing good data on this article. I resumed this only from pieces of information that stored in my mind, but I’m pretty sure that general explanation here is correct.
Note : this article is dedicated to Tanneke:D . I promise her, that some times I’ll write a blog in English.