Know about the trends in crude oil prices

SteveWiseman

New Member
Jan 7, 2010
1
0
1
The headlines of most of the crude oil news reports are totally taken up by the news stories related to the rise in crude oil pricings. Crude oil market has been showing its monopoly in the global economy for the past couple of years. Most of the global economic failures that occurred in the past were in some way or the other connected to the fluctuations in crude oil prices. But the recent one was something different from the previous ones, and mounted up steadily. Most of the countries, developed as well as developing, had foreseen the disaster, and had prepared themselves to face the aftermaths of the disaster, which was unavoidable. A close look at the calculation of OPEC will help in understanding the importance of crude oil prices in global economy. The OPEC reference basket of crude oil recorded a price range between US$20 and US$40 / barrel between 2001 and 2004. This grew over US$70/barrel in 2006 but again showed fluctuations, coming down to a level of US$55/barrel. In real terms the crude oil rates that prevail now are much lower than the rates that were heralded in the beginning of 80s. US crude oil rates reached its highest records in July 2006, a record rate of US$78.40/barrel. Most of the crude oil experts and analysts had predicted a crude oil price of US$105 during that time. The main reason behind the rise in crude oil prices is the difference seen in the supply and demand of oil and gas products. Oil refineries find it very difficult to increase the supply, with the increase in demand for oil & gas products. Hence we have to reduce the usage of oil and gas products greatly, and opt for alternative energy resources, to reduce the crisis.
 

wulfie68

Council Member
Mar 29, 2009
2,014
24
38
Calgary, AB
Huh?

First thing, your numbers are confusing. Where exactly are they from?

Here's a link to the NYMEX light crude historical data from the last 10 years.

Light Crude Oil (CL, NYMEX): Monthly Price Chart

In the last 10 years the price of crude has gone from a low of between $17-18 USD in November of 2001 to a high of over $146 USD in July of 2008. Usually the price they quote on the daily newscasts is West Texas Intermediate which is a little higher. When you look at the chart, the prices are a lot higher than the numbers you were using.

Now numbers aside, you make a couple of disjointed statements that may have some degree of truth to them but don't make much sense in the context you related.

"The main reason behind the rise in crude oil prices is the difference seen in the supply and demand of oil and gas products."

True. Thats how our economy works for the most part: supply and demand dictate how prices for products will be established. The thing to remember in this context is that the demand for petroleum products is increasing more rapidly in the developing world, which is providing the bulk of the upward price pressure.

"Oil refineries find it very difficult to increase the supply, with the increase in demand for oil & gas products."

Again true, especially in North America. Our refining capacity is operating at pretty much maximum (as witnessed everytime there is a pipeline or refinery disruption). Refiners have a reputation, earned and deserved in many instances for being large scale polluters, thus new refineries or expansions of existing refineries are a hard sell with most of the populace and our civic governments. NIMBY rules the day, and who can blame most people for feeling that way?

"Hence we have to reduce the usage of oil and gas products greatly, and opt for alternative energy resources, to reduce the crisis."

Huh? What crisis? You present no evidence of a crisis of any type but rather a reflection of of the law of supply and demand with some seemingly fudged numbers. I agree that alternative energy sources are preferential to fossil fuels for a number of reasons (environmental impact and renewable vs non-renewable being chief amongst them) but trying to manufacture a crisis doesn't help resolve the outstanding issues. To be honest I'm still trying figure out what the issue is here...