>It has finally happened – Crude-oil futures surged nearly 5% Tuesday to close above the $US 100 a barrel mark for the first time ever, as concerns that the Organization of Petroleum Exporting Countries may cut production and a Texan refinery shut down boosted prices. Despite a potential US recession and global slowdown – normally bad for crude oil prices, oil prices keep rising. Economists are struggling to explain this, even after accounting for US dollar weakness (the currency in which crude oil is priced). Most say speculation is one of the big drivers for the $10 rise this week alone.
Most “experts” think that the factors driving up oil prices are temporary and prices should fall back to around the $90 mark by month end. However, you will soon be seeing higher prices the next time you fill up the car. Higher transportation costs will also drive up grocery prices and eventually lead to inflation. Higher inflation will mean higher interest rates. So you see, oil going up has much more impact than just sky-high prices at your local fuel station.
What other factors do you see driving oil prices up or down in the year ahead? Some say China and India are adding so many cars to their roads everyday that fuel demand from these countries will push crude oil prices to $US150 by 2010.
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