Ever faster rises in crude prices are prompting the question – are we heading for a new oil crisis? Oil has been hitting new record highs virtually every day. Energy experts and even OPEC ministers are now talking about $200 a barrel being increasingly likely in the not too distant future.
The average price of US light crude in the month of May has risen from $25 a barrel in 2002 to over $126 on Friday.
New York trader Mark Solazzo said consumers will cut back: “There’s going to come a point where they’re not going to be able to pass this off to the consumer. People are already driving less, not making that extra run to the store. That becomes supply and demand, and if the demand comes off for petrol, then you’ll see the price comes off.”
But for moment, in the face of the probable $200 barrel the race is on to develop alternative technologies.
Analysts calculate that every $10 rise in oil knocks about a quarter of a percentage point off the gross domestic product of developed countries
In Africa, the benefits of international aid to its non-oil producing countries have been wiped out by increased oil costs, according to a study by the International Energy Agency.
For all big business, including oil companies, soaring fuel costs can cut profits. But none of that matters to the investment funds who just see an opportunity for a good return on their money and continue to buy oil.