You make a very good point...crude oil is trading over 72 US$ a barrel and governments are reluctant to cut fuel taxes, so the price at the gas/petrol station is likely to stay high or go even higher. The recent spike in crude prices is probably due to a number of short and long term factors, e.g. tension over the Iran situation, concerns about Gazprom warning the EU, and the simple fact that global energy demand is rising but supplies are limited. To try and answer your question, I think the people who profit from the higher prices are clearly the oil companies, oil producing states, and most governments world wide because they typically recieve a percentage cut of the retail price in the form of tax/VAT on fuel sales in their respective country. I can certainly see why cyclists might feel extra happy these days and I have in fact bought a bike myself. However, for longer journeys cars are essential and all I can suggest is that consumers who wish to reduce their fuel costs should urgently consider switching to vehicles which have greater fuel efficiency.
phil, Apr 21, 2006 @ 00:29

Yes I agree with you and that is a very fair point. I work in financial markets but I am not a commodities expert so Shorrick might well be more up to date on this than I am. Recent movements in oil price are perhaps not entirely justified by current production and consumption data. I also agree with you that hedge funds are playing a considerable part. However I feel that the point I mentioned concerning Supply and Demand was a fair point to make. It appears that recent oil exploration work has not yielded many large new reserves. The reserves which have been found are often located in areas which are politically unstable or geographically unsuitable. Civil unrest in places such as Nigeria is not helping, and the rebels there have cut off approximately 25 percent of the country's oil output. I feel this limits supply side growth and combined with the capacity limitations in the refining industry, I think the price at the pump is likely to stay relatively high. On the demand side, I agree with you that current demand has perhaps not changed much, but with the forecasted growth in China, India etc I feel that demand will increase in coming years. Given these issues, I think the current high price of oil is the result of the market responding to expected changes in supply and demand which are the two economic factors that determine price. I agree with your comments regarding the "summer driving season" excuse for high prices. Even when it is not "driving season" they tell us prices are up because of "winter heating oil demand".
phil, Apr 21, 2006 @ 02:34

Yes it is very interesting to see where gold prices have gone and I am trying to keep an eye on silver as well. The other one which interested me was the sugar price because it is often used to make ethanol which is a relatively common alternative to gasoline/petrol in places such as Brazil. (It would indeed be interesting to see the price reactions if funds decide to reduce their exposure to commodities like oil etc....as a consumer I would be happy to see fuel prices a little lower)
phil, Apr 21, 2006 @ 03:00

if the usa wanted to create a hydrogin based fuel cell and was willing to shift war money from iraq to support the production costs in the short term, we could all be running our cars etc, on hydrogin fuel cells. that being said, what would be the cost of oil on the world market then.......maybe 1$ a barril. just like coal, it's old technology. but, at 1$ a barril what would the saudi's and iranians do? they can't sell sand! they can't buy weopons. so there would be no terrorist threat.....and, no reason to have "homeland security"
epicure, Apr 21, 2006 @ 20:22

lorenzetti has a painting 'good gov't vs bad gov't' in Siena and maybe for today we can look at good fuel vs bad fuel. I like your idea of fuel cells as a way to disseminate political tensions as long as the handlers of such new technology don't in turn turn to terror or dictatorship!!!!!!!!!!
fishintree, Apr 21, 2006 @ 21:04

they are working well, but yes, expensive, due to the high production costs. however, take the cost of maintaining a war in iraq, and use it to fund the productions costs.....a no brainer, it would be cheaper than war.
epicure, Apr 21, 2006 @ 21:16

i really like the GIN part of the hydro :-)
epicure, Apr 21, 2006 @ 21:20

bush and co have promised the saudi's that if they keep the usa in oil, then the usa will not look for alternative sources.....and thus maintain the terrorist threat to "lead" the nation. ha!!
epicure, Apr 21, 2006 @ 21:31

well if we can't escape the greenhouse effect why not find a way to harness energy from hurricanes or tornadoes to light a few bulbs!
fishintree, Apr 21, 2006 @ 21:31

i should follow dilbert more often. Great stuff !!!
fishintree, Apr 21, 2006 @ 21:58

what a gas!
fishintree, Apr 21, 2006 @ 21:58