Monday 26 October 2009
A post-oil world gets less sci-fi by the day ☀
Oil has fallen sharply in price since last summer, but this is only because the world tumbled into its worst recession in decades, clobbering industrial output and trade volumes, and therefore oil demand. What is curious, though, is that oil prices, having tumbled below $40 earlier this year, went back above $81 a barrel last week, their highest for a year.There are plenty of possible reasons, such as the continuing fall in the value of the dollar, in which oil is priced, or the piling in of speculators who think a recovery will push up oil prices. Or you could reach for the old chestnut of supply and demand. Demand has fallen a lot, sure, but maybe supply is not what it used to be. Indeed, take a graph of the oil price over the past couple of decades, chop off last year’s spike to $150 and this year’s plunge to $35 and you can see that oil prices have been on a steady upwards trend for a decade. The question is why?
