A Series of Oil Price Increasing Events
Written by Major Tom
Filed under: News & Info
September 23, 2007
By this time, my 100 pesos would put lesser amount of gasoline into my fuel tank and of course, I’ll be having lesser mileage because of that as local oil companies have once again increased pump prices yesterday. Probably, this is the immediate result of what had happened about a week ago, when world crude prices obtained an all-time high at 81 dollars to a barrel.
And thus, the law on oil prices remains true. When world oil rates increases, local oil companies are so quick on their guns, increasing local prices as immediately as possible. And when world oil prices decreases—somehow happening once in a blue moon—local companies are so slow to react and in readjusting local prices accordingly, posing excuses such as old inventories bought previously at higher prices are still the commodities that they are pumping out of their gasoline stations. It’s worst than Murphy’s Law I tell you.
81 dollars. That’s an all-time high and it’s noteworthy of reiterating while as we speak now, some sectors are even predicting further escalation of world oil prices. The main cause of the recent increases is being blamed at the seemingly lackluster production of OPEC and it seems that the oil-producing countries are not so inclined to increase production as Qatari Oil Minister Abdullah bin Hamad al-Attiyah even asked this question, “What if I increase production and nobody buys it?”, referring to the dilemma allegedly faced by OPEC producers nowadays. I wonder if he is ever knowledgeable about a more universal law on supply and demand. If he increases production and not everyone would buy it, at least crude prices would go down globally and this would help the world economy from being hammered by energy deficiency, and thus avoiding widespread economic malaise. It doesn’t take a rocket scientist to realize this. In the event a 100-dollar per barrel becomes imminent or even appertaining, to be sure there’d be a global economic meltdown nobody wants that to happen.
In light of this, I can sense that OPEC is just being reactionary to Asia-Pacific Economic Forum’s recent declaration on emission reduction by as much as 25% by 2030. Despite that the Sydney Declaration is mostly non-binding (not mandatory to signatory nations), it still remains a very strong move towards decrease in carbon-producing activities, or lesser use of fossil fuel as a means of production and transportation. By then, OPEC would foresee lesser selling opportunities as manufacturers would be opting for other sources of energy (what exactly they are we are not still sure at this time) for industrial production and transportation. Maybe, emission reduction would mean more use of bio-fuels and more hybrid cars on the road. OPEC would surely have lesser customers in that situation.
Is the recent increase in world oil prices (reaching a level never-before breached) merely a reaction of OPEC to APEC’s emission reduction move? We are not so sure by now, but the timeliness of recent events makes me think this way.
To be honest I am surprised that the traffic in Manila is not decreasing at a quicker rate. I guess the owners of those big and gasoline eating cars must be rich enough to support the price hikes.
Well, the Opec and other oil producing countries are making lots and lots of money. Don’t think they feel any pity for us.
Comment by Sidney — September 24, 2007 @ 6:29 am
To Sidney:Most likely, the rich would be spared from the gas price hikes since they have a lot to expend. But the public majority would surely feel the pressure, like myself. A liter of gas does not stretch like it had usually did just about a year ago, that’s how sharp the changes feel.
Comment by Major Tom — September 24, 2007 @ 8:06 am
Sadly, it’s all about increasing one’s revenues despite the pains it may inflict on others. Yet all that money remains here on earth.
Comment by eric — September 24, 2007 @ 12:17 pm
To eric: Greed becomes a factor here while there is truth that wants and desire are intrinsically insatiable.
Comment by Major Tom — September 24, 2007 @ 3:25 pm
Gasoline is very expensive here in Cambodia… much more than in Manila. I do hope that alternative sources of fuel would be available soon… at least, it would justify the reactionary actions of the OPEC countries.
Comment by Toe — September 24, 2007 @ 4:29 pm
To Toe: And would you believe that despite how Filipinos are complaining so much about oil prices, gasoline rates hereat is considered to be one of the lowest in Southeast Asia, and of course, in the whole world. Amazing really.
Comment by Major Tom — September 24, 2007 @ 10:11 pm
Nakupo! That means increase in commodities as well or transpo fares??!
Comment by Ferdz — September 24, 2007 @ 11:17 pm
I am not so sure about APEC’s because it is non-binding. They can declare anything. It’s like a boy scout’s honour wherein anyone can recite. But do they really execute everything? A promise of 25% emission is very good. But it won’t have an immediate effect on oil prices…at the moment.
Producing oil perhaps at this stage is expensive and those that they are still marketing were produced months ago. Well, it’s a cartel, they can dictate price. Imagine selling their old stock at the current rate. Isn’t that huge profit? But producing now at the current rate is expensive. Not just on the manufacturer but consumers as well. Who’s going to buy?
Comment by ipanema — September 24, 2007 @ 11:50 pm
With Canada’s economic windfall on the high cost of energy, it hasn’t given its citizens a break on gas prices either. The Canadian dollar is now at par with the US dollar but we are still paying ludicrous gas prices
Comment by bw — September 24, 2007 @ 11:55 pm
To ferdz: That’s most likely to happen and it is so inconvenient.
Comment by Major Tom — September 25, 2007 @ 9:12 am
To ipanema: But you know, oil had always been a big profit business. One can see that in how almost all oil-producing countries have progressed so much despite that their only viable export is oil. OPEC could surely be a little considerate and allow prices to go down to reasonable levels and avoid global economic stagnation.
Comment by Major Tom — September 25, 2007 @ 9:16 am
To BW: That’s not ideal at all. At least, they’d have tax breaks for fuel use. But I’ve read how one county in Canada have distributed cash dividends from oil sales. I just forgot the specifics.
Comment by Major Tom — September 25, 2007 @ 9:18 am
There’s no question that oil isn’t a big profitable business. It is a monopolistic product, hence, people will buy it at whatever price. It’s a necessity.
Comment by ipanema — September 25, 2007 @ 6:43 pm
To ipanema: That’s what’s on my mind really—OPEC can keep up with any price. Maybe they shouldn’t be as steep in their pricing.
Comment by Major Tom — September 25, 2007 @ 8:43 pm
Like I always say, the sooner an alternative energy and fuel source can be harnessed, the better for mankind. For years, we have been hostage at the whims of the few who control the prices of oil. With their oil resources dwindling fast, I won’t be surprised if those oil-producing nations from the middle east would take advantage of the situation, and jack up the prices to dizzying heights.
Comment by snglguy — September 26, 2007 @ 8:57 am
Tell me about it…gas prices has never been this high. From Premium gas, we downgraded to Mid Grade since prices soared high. Sometimes, I wish I can just ride a bike (less expenses, more exercise) to school.
BTW, just did the tag. Sorry for the delay.
Comment by momoftwo — September 26, 2007 @ 10:03 am
To Snglguy: Nuclear energy would surely drive down power cost in the long run and keep the air clean from dark smokes. But…it poses other more sinister hazard like radiation and radioactive waste. Maybe one day, an ideal source of energy would come, better than biofuels or solar energy, cheap, convenient and widespread.
Comment by Major Tom — September 26, 2007 @ 12:52 pm
To Momoftwo: Is that possible? Going from premium to midgrade? I wonder if such is viable here in our country. I know regular gasoline is a tad cheaper than premium…
Thanks for doing the tag…
Comment by Major Tom — September 26, 2007 @ 12:54 pm
Our car manufacturer suggests Mid grade but when my car was still new the hubs told me to use Premium. Not really sure what the difference hehe. All I know is that it takes me where ever I want to go LOL!
Comment by momoftwo — September 27, 2007 @ 1:21 am
To momoftwo: My car is not new at all so perhaps I’d consult an auto mechanic for this. I’ll have good savings if I can use regular…
Comment by Major Tom — September 27, 2007 @ 8:13 am
We can all agree that the price of oil will continue to rise. I have learned that one can offset the price one pays at the pump with the profit it a futures account. I currently use cqg and x trader and I love it. It is a great way to take advantage of the global growth boom. Check it out. Thanks, Wayne
Comment by Wayne Brown — February 13, 2008 @ 12:19 am