Oil Panic on The Rise

Oil Panic on the Rise by Gustavo Coronel

...For the last two years now the price has been in almost uninterrupted climb, while demand does not show signs of abatement. New forces and revitalized old forces are at work to dampen this “thermostat” effect. Some of these factors include:

• A widespread feeling that oil and other basic raw materials are getting scarce. Entire nations have adopted a hoarding mode.
• Financial speculation has led to acquisition of oil based on the assumption that scarcity will lead to greater prices.
• Institutional investors, protecting themselves of a weakening dollar, are buying not only oil but also gold, platinum, copper and other raw materials.
• Increasing geopolitical tensions, both in minor scale such as vandalism of oil facilities in Nigeria and in a larger scale, such as Iran’s showdown with the United States and Europe over the nuclear issue and over Iraq, or the almost inevitable collision course between the U.S. and Hugo Chavez.
• A weakening of the U.S. -- Saudi Arabia alignment due to Saudi’s fear of a future, less friendly U.S. administration.
• A real increase in world oil demand, due to the high rates of growth in China and India.
• Concern about global food scarcity and about the role of bio-fuels in this scarcity.

Read the rest of this sobering observation here...