Oil prices....^^^ why?

bbc report

The above link is a good resume of the socio-ecomomic reasons why oil prices are so high.

I cannot think of any technical reason that would have affected oil prices so much in such a short period of time.

GA. You gave a good answer. This is a good overview of the big picture. Of course everyone knows that there is some emotion driving the market - as is investors making money on a moving commodity. Investors don't like stagnate market - they need movement.

Aside from that, we in the US have a huge amount of resources that can keep this country alive and well. It make take some nuclear power and wind. Tell me the wind doesn't blow in the Texas panhandle. We have the potential for a huge biomass solid fuel industry. We have huge future reserves of oil that the environmentalists have helped preserve. The US has a huge supply of coal and shale. I read a report that our biggest supply of energy is wood which is bigger than coal! And the list can go on and on. As you said "we need to pull the finger out" lets hope we do it wisely.

supply vs demand.
oil is a diminishing resource.
US foreign policy has reduced supply.
Greed/wastage/overuse by the industrialised nations.

However, the supply demand equation right now does not support the price. Part of the problem is devaluation of the US dollar, but most of it is that since other investments particularly in the US are not doing so well (real estate, banking, stocks) there has been a huge move into oil by investors, and thus an artificially high price..

I would say the price is derived from the expected shortage of crude vs long term demand at current and escalating levels.

The price will stabilize and even drop if the demand is reduced to sustainable levels.

Here is the latest from the US Energy secretary on the subject. For what it is worth...

http://news.yahoo.com/s/ap/20080607/ap_on_bi_ge/oil_prices_bodman

hi " chaterpilar ",

There are many reasons that cause increase in oil price.

The oil producing countries have a strong association and unity that empower them with better bargaining power with it's total control in quantity of crude oil production and international selling price.

The the fast development of under developed countries resulted in their economical growth resulting in sudden increase in consumption of crude oil products.

As the use of coal based energy production has reduced due to green house considerations and shortage of coal production and mining .

Lack of cheap energy from other energy sources like solar, wind and biogas.

Lack of Production of energy efficient equipments and poor energy conservation and management.

Thanks everybody.....i feel we have'nt seen the worst...yet.

Hi chaterpilar ,

You are lucky . We are not that lucky , we had a 10% hike in petrol prises last week only and still expecting further hike.