“Oil prices spiked to a new record above US$147 a barrel Friday, as rising hostilities between the West and Iran and the potential for attacks on Nigerian oil facilities gave investors reason to rush back into the energy markets.”
Ouch! $147 a barrel is getting crazy! I don’t know about you but I seriously had to cut down on the amount of driving I do.
“gasoline futures rose to a new trading record of $3.631 a gallon before easing back to $3.6194, up 10.85 cents. Heating oil futures rose to their own trading record of $4.1586 before falling to $4.144 a gallon, up 10.66 cents.”
Pretty soon we will start to see $4 and $5 per gallon gas prices!
I think this whole high oil price phenomenon does not reflect actual market conditions. In fact , claims of an oil shortage are not supported by facts. Evidence shows that, in reality, there is no discrepancy between production and consumption of oil on a global level. Citing statistical evidence of parity between production and consumption of oil, OPEC President Chakib Khelil recently emphasized that there was no shortage of oil: “As far as fundamentals are concerned I think we have equilibrium between supply and demand. . . . In fact right now we have more supply than demand.” [2]
So what is causing these record high oil prices?
The answer I believe is: war and geopolitical instability in oil markets. Contrary to the claims of the champions of war and militarism, of the Wall Street speculators in energy markets, and of the proponents of Peak Oil, the current oil price shocks are caused largely by the destabilizing wars and political turbulences in the Middle East. These include not only the raging wars in Iraq and Afghanistan, but also the danger of a looming war against Iran that would threaten the flow of oil out of Persian Gulf through the Strait of Hormuz.
What do you folks think? Or better yet, can we investors still profit from rising energy market or has it already plateaued?
Join me in a discussion on this topic at my forum over here
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