Since last July, the average oil prices of the Organization of Petroleum Exporting Countries have almost doubled, rising from less than $70 per barrel (dpb) to over 140 dpb. Facing the skyrocketing prices, different people gave different reasons.
CONSUMING COUNTRIES: INADEQUATE SUPPLY MAIN FACTOR FOR PRICES HIKE
During the debates on why the oil prices surged so high, most Western oil consuming countries said the situation has largely resulted from supply shortage, and they blamed OPEC for refusing a production increase. In the United States, the world’s top energy consumer, the lower house of parliament has adopted a bill earlier this year which authorizes the US government to sue OPEC for controlling oil prices. In a report released recently by the International Energy Agency (IEA), it said that the real reason for the current high prices was the concerns on the global stable supply in the future.
IEA predicted an annual demand growth of 1.6% till 2013,which means the daily global oil output should rise from the current 86.87 million barrels to 94.14 million barrels. IEA’s latest energy report also adjusted its oil demand of the second half of this year from 86.10 million barrels per day to 86.90 million barrels, predicting even a daily demand of 87.70 million barrels for next year.
OPEC MEMBERS REJECT ACCUSATIONS FROM CONSUMING COUNTRIES
OPEC members, rejecting the accusations from the consuming countries, have blamed speculators for inflating oil’s rally and adding volatility to the trade. They have demanded further regulation of future markets to give a blow to speculators. They also attributed the price hike to the weaker dollar and escalating geopolitical tension rather than the imbalance between supply and demand.
King Abdullah bin Abdul-Aziz of Saudi Arabia, owner of over one-fifth of the world’s oil reserves with a strong say in OPEC, announced recently that the high prices were mainly the results of speculations and OPEC would remain powerless in curbing the prices. Their reluctance for a production growth is mainly drawn from their concerns over the growth prospect in the international oil demand in the coming years.
Due to the increasing oil output of the non-OPEC countries and the widening use of the alternative energies such as biofuels, OPEC predicted that the growth of the global oil demand would slowdown and therefore lowered its global oil demand forecast for the year 2030 to 113 million barrels per day, which was some 4 million barrels less than their 2007 estimation.
It is the current OPEC belief that the world’s main oil consuming countries have had a downward trend of crude oil consumption due to their investments in the energy-saving technologies and alternative energies. Obviously, OPEC members considers it risky if they invest large amount of money into their oil exploitation and refining capability due to the uncertainties in the future oil demand. As such investments usually take five to seven years to take effective in the production capability, these OPEC countries worried that the supply and demand on the international oil market would be even reversed at that time.
They therefore will continue their reluctance in raising output unless they get future demand insurance from the oil consuming countries.
EXPERTS CALL FOR WORLD JOINT RESPONSIBILITY
Prices for crude oil, as one of the most important strategic resources and basic raw materials, would be influenced by not only supply and demand but also geopolitical developments, global economic outlook, climate policies, population and stock market, experts generally said, thus calling for a joint responsibility.
Experts also reached another consensus that the recent souring prices should be attributed to financial factors rather than the commodity itself. The devaluating dollar pushed a large amount of money into such commodity markets as oil and gold, just as Iranian Oil Minister Gholam Hossein Nozari put it earlier that “the problem was not the oil was too expensive, but the dollar too cheap.” (Xinhua)