Jump to content
House Price Crash Forum
interestrateripoff

Oil Prices Hit Fresh Highs On Supply Worries

Recommended Posts

http://www.bbc.co.uk/news/business-12955973

Oil prices have hit new two-and-a-half year highs as worries continue about unrest in oil producing nations in north Africa and the Middle East.

The price of Brent crude edged above $120 a barrel to $120.08, a two-and-a-half-year high.

US light, sweet crude reached $108.78 a barrel, a 31-month high.

In addition to the recent unrest, hopes of stronger growth in the US and supply problems in western Africa have also helped to push oil prices higher.

At least the oil price can't trigger another recession.

Share this post


Link to post
Share on other sites

Brent crude broke above £75 a barrel today and in sterling terms the price has now exceeded the high of 2008.

Brent reached a high of $147.50 on 11 July 2008, but at the time the GBP/USD rate was 1.988, giving a sterling price of £74.20.

This time last year Brent was £56.20/bbl, so the price today is 33.5% higher.

Brent040411.gif

Share this post


Link to post
Share on other sites

Don't worry it's temporary, Merv told me.

Well, that’s the problem – it may well be.

If this price spike sends us back into recession and demand drops, then the oil price could come crashing down again as it did last time.

But will we get Merv and other MPC members telling us that such a price slump is an exogenous event that doesn’t merit a policy response? Yeah right.

Instead we’ll get the ‘deflation cometh!’ call to arms again, Adam Posen will be telling us ‘I told you so’, and the QE printers will be loaded up with fresh ink faster than you can say déjà vu.

Share this post


Link to post
Share on other sites

Well, that’s the problem – it may well be.

If this price spike sends us back into recession and demand drops, then the oil price could come crashing down again as it did last time.

But will we get Merv and other MPC members telling us that such a price slump is an exogenous event that doesn’t merit a policy response? Yeah right.

Instead we’ll get the ‘deflation cometh!’ call to arms again, Adam Posen will be telling us ‘I told you so’, and the QE printers will be loaded up with fresh ink faster than you can say déjà vu.

Would I be right in saying this could be big problems for the US, if the price is high then the sheikhs taking the money are happy and there is lots of money leaving the US but if the price crashes and the sheikhs see the US printing again while they are using what reserves of there own currency they have to pay off there population to stay in power could the sheikhs possibly dump there reserve currency (i.e. The dollar) on the Market and call in the end of the dollar, or is there still to much faith in the dollar?

Edited by pezo

Share this post


Link to post
Share on other sites

Well, that's the problem – it may well be.

If this price spike sends us back into recession and demand drops, then the oil price could come crashing down again as it did last time.

But will we get Merv and other MPC members telling us that such a price slump is an exogenous event that doesn't merit a policy response? Yeah right.

Instead we'll get the 'deflation cometh!' call to arms again, Adam Posen will be telling us 'I told you so', and the QE printers will be loaded up with fresh ink faster than you can say déjà vu.

How do you cut from zirp and when you already own most of the duff assets, the banks, a sizeable chunk of govt. debt and are running a rather large fiscal deficit?

Share this post


Link to post
Share on other sites

129.9 a litre and it actually crossed my mind that it was a decent price :blink:

ouch ouch ouch

It was £1.54 at a motorway service station on Sunday. <_<

Share this post


Link to post
Share on other sites

Now the lead story on the Financial Times site:

Oil prices reach record sterling high

By Chris Giles, Javier Blas and Sylvia Pfeifer

Published: April 4 2011 21:53 | Last updated: April 4 2011 21:53

Oil prices have hit an all-time high in sterling terms, squeezing incomes and increasing pressure on the Bank of England to raise interest rates.

Brent oil prices rose above $121 a barrel on Monday, well below the $147 a barrel record set in June 2008. But the 17 per cent fall of sterling against the dollar over the past two years has raised the sterling price per barrel to £74.6, higher than the record set in 2008.

Link

Share this post


Link to post
Share on other sites

Petrol is still cheap - still only about 48p/litre

The rest is tax

We've been done a favour by being encouraged into high MPG cars with high taxes on fuel. Pity the poor yanks when peak oil and QE n puts energy at above $150 a barrel. They have no buffer and their national fleet does <25mpg.

And now we're net importers of liquid fuels, then every litre saved is a little less on the trade deficit.

Share this post


Link to post
Share on other sites

Well, that’s the problem – it may well be.

If this price spike sends us back into recession and demand drops, then the oil price could come crashing down again as it did last time.

But will we get Merv and other MPC members telling us that such a price slump is an exogenous event that doesn’t merit a policy response? Yeah right.

Instead we’ll get the ‘deflation cometh!’ call to arms again, Adam Posen will be telling us ‘I told you so’, and the QE printers will be loaded up with fresh ink faster than you can say déjà vu.

But if is the inaction of Merv and zirp across the western world that is helping to cause the commodity boom. It will be temporary but only because they did nothing.

Share this post


Link to post
Share on other sites

QE is definitely partly responsible for the boom in commodities. Makes sense to buy assets that can't be printed.

I do not believe raising interest rates would be sensible, we have missed the boat and the forecast rise in August seems sensible.

What we should do is fix the price of fuel at one level with duty, move duty up and down to maintain it. If we have to cut from somewhere so be it. Would it really be that complicated?

Edit

Also surely makes more north sea exploration likely despite the tax hike. Since costs are going to be paid in £ on north sea rigs. Not sure what oil exploration companies have to complain about when they are making a record amount of £ per barrel.

Edited by mattyfc

Share this post


Link to post
Share on other sites

Something the Austrian economist people said and I agree with is the rewards in the economy should be towards productive efforts. Well, bringing oil to market from challenging fields is certainly productive effort. And the best way to get people doing that is to keep raising the price for a barrel of oil.

The higher price of oil is leading to huge investments all over the world to bring more oil online.

Share this post


Link to post
Share on other sites

Something the Austrian economist people said and I agree with is the rewards in the economy should be towards productive efforts. Well, bringing oil to market from challenging fields is certainly productive effort. And the best way to get people doing that is to keep raising the price for a barrel of oil.

The higher price of oil is leading to huge investments all over the world to bring more oil online.

It will also lead to investment in alternative energy sources as the high cost of oil makes them more viable.

Share this post


Link to post
Share on other sites

We've been done a favour by being encouraged into high MPG cars with high taxes on fuel. Pity the poor yanks when peak oil and QE n puts energy at above $150 a barrel.

That's only true if they reduce the tax as the oil price goes up.

It's still cheaper to drive a gas guzzler in the US than a fuel efficient car here.

Share this post


Link to post
Share on other sites

What's the problem? Oil producers just turn on the taps a bit more and the price comes down, isn't that the way it works? :rolleyes:

It worked very well indeed when Texas had this job between 1950 and 1971.

It sort-of worked from ~1985 to ~2004 when OPEC unofficially did the same, usually via quota cheating.

Now all we need to do is find a new country that can export up to 20 million barrels per day and is prepared to use that capacity to moderate the oil price for the next couple of decades.

Edited by fluffy666

Share this post


Link to post
Share on other sites

It will also lead to investment in alternative energy sources as the high cost of oil makes them more viable.

An example is around the world large amounts of oil is used for heating homes and for cooking in the developing world. Some nations also burn oil for electricity, like Saudi Arabia, which is investing into the tens of billions of dollars to build natural gas electric infrastructure.

Further out Saudi Arabia hopes to build nuclear power plants, and to work on developing solar power.

Share this post


Link to post
Share on other sites

Filled my car up with petrol today 57 bucks 129.9 a litre and it actually crossed my mind that it was a decent price :blink:

ouch ouch ouch

Lucky man a Passat is now £96 @1.38 ltr for

Diesel

Share this post


Link to post
Share on other sites

It will also lead to investment in alternative energy sources as the high cost of oil makes them more viable.

There is a problem with this.

A lot of big companies got heavily into alternative energy of various sorts in the 1973-1985 'energy panic' period. Just as it was coming to fruition, the Saudis opened the taps and blew the economic case for all of this alt-energy stuff out of the water. This, combined with a major 'marketization' of the energy sector, means that lot of people are wary of investing. The only thing that really came out was that we replaced oil-fired electricity with nuclear power, a one-off saving.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.