Rising oil prices causing concern

Last Friday crude oil prices shot up with speculation that oil could eventually reach as high as US$100 a barrel or higher, sometime soon. According to Goldman Sachs in the United States, the oil market could be in the early stages of “a super spike” that could go as high as US$105 a barrel. However, other analysts are regarding the Goldman Sachs forecast as a worst case scenario and see such a high jump in oil prices only coming if there was a major disruption in supply. Prices have remained above US$55 a barrel in recent days and the Goldman Sachs forecast has taken that into consideration along with strong global demand and threatened instability in a number of oil producing countries.

The expectation of Iraqi oil flowing  non-stop to boost supply in the face of growing demand has not been realised. But the Organisation of Petroleum Exporting Countries (OPEC), of which Saudi Arabia and Venezuela are also members, has been stepping up production to meet the increased demand. What is emerging is that in spite of not accepting the possibility of a worst case scenario, those who see other possibilities are nonetheless displaying guarded optimism. They know that in most countries the price of oil is a factor that exerts heavy influence on economic success. To remove some anxiety over fluctuating oil prices, countries are now prone to have bilateral agreements with oil-producing nations that provide a number of guarantees against oil price shocks. However, prevailing oil prices cannot be entirely disregarded whatever might be the individual arrangements among countries on oil prices.

Experience has taught us that where the oil prices are concerned there is little we can do as individuals to influence them. While we can try and save money by reducing energy usage, we are not self sufficient in oil even though the picture is a lot more encouraging for natural gas. With the large number of vehicles we now have on the road in Barbados, the demand for petrol alone will be there for many years, ensuring that we should not be indifferent to what the experts say about world oil prices. All this is apart of the oil factor in production of our electricity, the cost of which has to be met by individual consumers of electricity in their monthly bills.

(Courtesy the Barbados Nation)