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Originally Posted by ltd
Snappy, no offence mate, but you are way off the mark.
Oil started increasing in 2000, where it went from US$10.70/barrel.
In 2001 it went up 300% to $32.00/barrel, and in February 2003 when the USA went into Iraq it was around the $100/ barrel.
One of the biggest contributing factors to the oil crisis right now is the subprime crisis in the USA. This has forced market speculators into commodities such as oil, and they have hedged prices to the extent that they are now. Furthermore, oil suppliers are reluctant to increase production for they fear that they have already oversupplied oil on the basis that there is an immense amount of oil stocks ready for shipment, but awaiting an actual buyer.
If you cast your mind back to the IT boom late in the last century and the bust earlier this century, it demonstrates clearly what hedge based buying can do. In the airline business, most of the upper echelons in the know predict the price of oil to be back around $105.00 per barrel by November.
Another thing, the price of oil is cyclical in so far as rallying prices and boom/bust sequences.
In the 70's when the world experienced its last oil scare, the price pressures forced markets to invest heavily in alternative energy. This led to developments such as the worlds first hydrogen powered cadillac; driven and promoted by no less than Jack Nicholson. After demonstrating to the oil producers a capacity to not need to rely upon their only source of trade, the oil board (now OPEC) lured the world back to oil with lower prices. After the shock and meltdown of financial markets on the back of an oil driven global recession, OPEC will again ask us to trust them as they again try to lure us into a false sense of security based on their product.
Some say their profiteering has gone on too long and that more is known about the downside to their product, rendering oil obsolete in the future and rightfully punishing OPEC nations for their greed. I say, bring it on.
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No offence either but I think you've overlooked the effect that speculation of war had on the oil prices, pre-Iraqi invasion. It happened to coincide with the period you describe.
Talk of invading Iran is reason enough for investors to justify buying up more quantities of oil. :togo: Never have I witnessed the world just stand back and allow Bush and Cheney (on behalf of Israelies everywhere) to control the world for the purpose of enhancing their own personal wealth.
I'd say the American's have a lot to answer for wrt the crisis we are now facing. The oil crisis has already destabilised the world economy and it's only going to get worse as oil is the only thing that will get the US out of the hole it's in right now. Only the rich profit from such crises while the middle class begin to struggle and the poor start begging in the streets in increasing numbers as people tighten their belts and give less to charity.