Friday, May 25, 2007
Kiss the house market bye bye!
Guardian: Petrol to hit £1 a litre within weeks as oil supply strains show
The last hope by the MPC to avoid further IR rises is gone with the oil prices going back to the levels of 2005. The good thing is not so much that rates are going up, but that they will stay high for a while.
Posted by confused76 @ 02:42 PM (307 views) Add Comment
10 Comments
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1. Rickyb said...
I can't see the oil producing nations letting oil get to more than $80/barrel and sustaining these prices for long. This is because above $60/barrel, the synthesis of oil products from coal starts to become economically viable. Oil producing nations are unlikely to want companies to start investing in synthetic petroleum plants while they have oil reserves which are economically recoverable, and they will therefore try to ensure that the long term price stays low enough despite the occasional peaks that we see from time to time.
2. confused76 said...
...and you need billions of pounds and 10 years to build the chemical plants... oil product synthesis worked in South Africa during embargo and in Germany during WWII
3. Orwell said...
Where is your authority for that statement ? Are you sure that it is the $80 mark? Wasn't Scargill trying to do that back before all the pits were closed down here?
4. talking rot said...
Rickyb
Saudi Arabia is close to maximum production; they can pump more but they do not have the infrastructure to do something useful with the crude. Syria's production has peaked. The export pipelines from Iraq are more perforated then the average tea-bag. Iran is under US-led international pressure because of its nuclear programme. Nigeria has troubles and wanton destruction. Gulf of Mexico is facing a bad storm season so leading climatologists say, north sea production has peaked, resurgeant Russia is exercising its muscles once more. China is sucking the world dry, US driving season about to start, my bicycle chain needs oiling.
These factors are not conducive to fall prices.
5. Pr said...
You assume that there are enough oil reserves. Look at www.theoildrum.com where there are discussions going on which suggest that the present plateau of production is not voluntary. One would expect output to be rising at present. Don't be fooled by alternatives also, we simply don't have the capacity to raise production by a few million barrels per day through new technologies in reaction what will be viewed by many as temporary market fluctuations. Investors need a buffer to avoid undue risk, so we would need sustained oil prices of £80-100barrel over a few years, combined with government underwriting to motivate new technology, unlikely with all the resources that will be ploughed into nuclear. Prices, by that time, will have caused a housing and general equity crash globally. Sure, techology was used in the world wars, because shipments were often impossible, war can encourage new technologies, but that has no paralells to today's peacetime economics.
6. Rickyb said...
Any or all of these factors may well cause oil prices to rise in the short term. However if long term crude oil prices remain high enough for the synthesis of petroleum products from coal to become more profitable and less risky, then energy companies are very likely to start investing in synthetic petroleum plants.
7. nearly30 said...
talking rot - yes my bike chain needs oiling too - face it - oil will be $80+.
8. mike said...
As our "oil" (diesel/petrol) is already 80% tax, I say the taxman should take that extra bill, not us.
9. This comment has been removed as it was found to be in breach of our Blog Policies.
10. Mr 't' said...
my bike chain need's no oil.