It’s been a busy few days over the Bank Holiday weekend. So I haven’t been able to update the blog, needless to say I’ll back on track soon enough, and reply to any comments.
Been a nice sunny weekend here, and I managed to get out and watch some cricket on Saturday. Great stuff!
If you’re looking for something to read, you could do a lot worse than reading Niall Ferguson’s commonsense review of the current oil-market, here.
Sphere: Related ContentThis blame game is a farce. The price of fuel is high precisely because of “supply and demand economics”, as Lord Browne knows only too well. Global demand for oil has risen by around 40 per cent in the past 20 years. As so often in world economic affairs these days, a crucial role is being played by China. In the last five years, the G7 countries have accounted for just 15 per cent of the growth in global demand; China has accounted for twice that.
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But the much more serious problem is environmental. Here, I have to dissent from the fashionably contrarian view that global warming isn’t happening or doesn’t matter. For 400,000 years, the world’s atmospheric concentration of carbon dioxide (CO2) fluctuated between 180 and 280 parts per million (ppm). Last year it reached 380 ppm. The evidence that global temperatures are rising as a result is incontrovertible. True, no one knows exactly what the effects on the world’s climate may be. But, once again, only a fool thinks there will be no effects.
The trouble is that high oil prices are not a signal to mankind to do anything about CO2 emissions. On the contrary, they are as much a signal for oil companies to exploit hitherto non-viable deposits of hydrocarbons, such as Canada’s tar sands. At the same time, high oil prices do not deter people from buying gas-guzzling cars. Indeed, the demand for Sports Utility Vehicles like the monstrous Hummer seems to be (as economists say) “price-inelastic”. Better-off Americans are still buying Hummers even with gas at $3 a gallon.
Euphemisms are great in politics: “supply and demand economics” means in plain language, a language for everybody to understand, that the oil corporations are availing themselves of the moment when China wants oil to raise prices and stuff up their coffers, at the expense of middle-class and poor drivers who have to fill the tanks of those cars that subsidiary corporations, or sister corporations, of those oil ones sell them at profitable prices.
The vicious economical circle.
You’re right Jose, but commodities are ruled by the price-mechanism, and the only solution is a wind-fall tax on profits, which would curb exploration – keeping prices high!
I know, Tyger, but why don’t they inform the public in general with clear words as is their duty?
I once had a friend here who confessed to me that taxes on fuel applied by the local government had to be lowered because of the increase on fuel prices - you know a percentage on prices -, but as the public will never get aware of it, they were keeping the same level of taxes just in case. Imagine!