Why are oil prices rising so fast? (1)
The BBC web site has a short piece which manages to suggest no less than seven reasons:
- Rising demand from China, the Middle East and Latin America – but we’ve known this for months and even years
- Doubts about future demand – which seems to contradict the first reason
- Israeli threats to strike on Iran over its nuclear programme – but that’s not new either
- A report by Morgan Stanley analyst Ole Slorer
- Investors hedging oil against the weak dollar
- Fears that workers at Chevron Corporation in Nigeria may go on strike
- A cut in subsidies by the Indian and Malaysian governments
In short, media commentators have no clue why oil prices have risen so dramatically and so quickly day by day by day. But I can offer two suggestions
- Panic
- Speculation
Free markets are supposed to be rational, but the people who run them are both scared and greedy. Meanwhile we all suffer as prices at the pump – not to mention prices of all goods which are transported – go up and we and our governments can neither understand nor control the vagaries of the so-called free market.
June 8th, 2008 at 4:46 pm
You are wrong, man.
Why are oil (and other) prices rising?
The main reason is not panic and not speculation.
It is:
1. Inflation.
2. Money supply growth.
See:
http://www.shadowstats.com/imgs/sgs-m3.gif
June 9th, 2008 at 11:40 pm
But inflation and money supply do not change day by day and oil prices have been going up day by day.