Pumped-up oil prices will hurt us all

[DoYouEverWonder]

Monday November 1, 2004
The Guardian

Following the oil market this year has been like Groundhog Day. Every day, you wake up and the price of a barrel of the black stuff has set a record. In fact, oil prices are up more than 70% since January and last week US light crude set a record of $55.67 a barrel, nearly triple the average price through the second half of the 80s and 90s, and double the level of a year ago. London Brent was a record $51.90.

Although US crude fell below $52 later in the week as traders took profits, most think the respite will be brief.

The rise may delight BP, which recently reported record profits, and Gordon Brown, who will receive a much needed boost to tax revenues, but for the rest of us it is a worry. The reasons for the rise are clear, say the experts, though none of them saw it coming.

Demand for oil is at its highest point for 25 years, in particular in China and the United States. Supply is running close to the max and any disruption, real or potential, such as in Iraq, Russia or Nigeria, is enough to notch the price up a few more dollars. If the northern hemisphere has a cold spell, which boosts heating oil demand, prices could easily break through $60 a barrel.

http://www.guardian.co.uk/business/story/0,3604,1340494,00.html