“Can the world afford to buy oil at thirty dollars a barrel?” Ed Crook stresses the worldwide delay in satisfying heightened global demand. Consequently he predicted prices would rise to and beyond thirty dollars a barrel.Oil dependent nations such as the United States and Europe are now becoming concerned at the high prices. In protest against fuel prices, French fishermen used their boats to block off the channel ports. Analysts are blaming the production chain for not exploiting other oil reserves as the global demand has been increasing since the 1980’s (although at that time exploitation of some European reserves was deemed uneconomical).The world’s tanker fleet is operating at ninety-seven percent efficiency (a first time since 1973) while refineries in the United States are working flat out. OPEC points out that the only real ‘problem country’ in terms of low production is Saudi Arabia. Economically, it would be in Saudi Arabia’s best interest to limit its production and keep prices high (at a fine line so that other nations do not start searching for alternative energies), however, pressure from OPEC has spurred production. In time prices will fall, but for the time being analysts are predicting the worst. “Goldman Sachs has suggested the $50 a barrel as a genuine possibility.”The countries that are expected to be hit hardest will be those in Europe due to the recent depreciation of the Euro (has it ever gained?) against the dollar. Analysts think that shortages are bound to pop up in the future. According to the business cycle model, supply fell when prices were low; however, when prices bounced back (demand) it took time before the supply met the demand. Although it is highly unlikely that we will see fifty dollars a barrel, thirty dollars seems to be on the cards. Analyst Ed Crooks and Gareth Davis believe both the United States and Europe can, for now, afford it.Due to ...
