Archive of UserLand's first discussion group, started October 5, 1998.

Re: Oil Gas Prices -- What's The Reason?

Author:Adam Farstrup
Posted:3/17/2000; 9:58:14 AM
Topic:Oil Gas Prices -- What's The Reason?
Msg #:15611 (In response to 15609)
Prev/Next:15610 / 15612

Several Causes:

1/ OPEC has gotten together and stuck to its production quotas driving the price of crude to around $30/barrel (up from its low around $11/barrel last year)

2/ Economic recovery in the Asian economies. When the Asian economic crisis hit in late '97, petroleum demand from this part of the world dropped significantly. These economies have made substantial recoveries, leading to increased demand.

3/ The northeast had a fairly deep cold snap in late January, early February increasing home heating oil demand after several years of mild winters.

The political aspects of not releasing the strategic reserves to put pressure on OPEC are puzzling. I haven't seen any good political analysis as to why this going on although oil obviously falls under the category of extreme power politics. Oil prices have receded somewhat and there are conflicting reports that OPEC may relent to IS pressure and increase production (although I highly doubt we will fall below the $20 / barrel level barring some major event).

Adam

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