The unabated rise in crude prices made me rekindled an event where I first heard of US$200-per-barrel oil.
In a Bloomberg seminar that I've attended last Jan. 2008 in Shangri-La Hotel in Makati City, Seaoil Phils. president Francis Glenn Yu revealed during the breakout session that there were already some oil-guzzling firms who have availed themselves of US$200-per-barrel forward contracts.
The price of oil today has not even reached the US$150-per-barrel level, and yet as early as now some people are already expecting that oil will reach the US$200 per barrel level. In fact, another ominous remark lately from the head of Russian energy giant Gazprom, Alexei Miller, predicting that oil is likely to hit US$250 a barrel.
Oil producers are always putting the blame to speculators as the reason why oil prices are surging up, which causes runaway inflation worldwide. But never they blame themselves for the messianic statements they are giving to media outfits as if encouraging those people to speculate all the more.
While speculation is indeed playing a role in commodity prices; however, its influence is not that decisive. It is still strong global demand, particularly from emerging economies like China and India, that causes escalating oil and energy prices. In addition to that, the trade embargo imposed by the American to some large oil-producing firms, like Iraq (4th largest oil producer), Venezuela (biggest oil supplier in America), Iran and Afghanistan, constraints supply in the world market.
Currently, several economies had experienced a runaway inflation last month, and analysts are predicting a much higher inflation rate in June. A galloping inflation rate could lead to social unrest, a warning given by the World Bank in the Global Development Finance 2008 study.
But what I am worried about is that when the situation persists, this may create a hyperinflation scenario, or a scenario where inflation continuous to increase despite economic growth declines. And hyperinflation usually happens during times of war!
The price of oil today has not even reached the US$150-per-barrel level, and yet as early as now some people are already expecting that oil will reach the US$200 per barrel level. In fact, another ominous remark lately from the head of Russian energy giant Gazprom, Alexei Miller, predicting that oil is likely to hit US$250 a barrel.
Oil producers are always putting the blame to speculators as the reason why oil prices are surging up, which causes runaway inflation worldwide. But never they blame themselves for the messianic statements they are giving to media outfits as if encouraging those people to speculate all the more.
While speculation is indeed playing a role in commodity prices; however, its influence is not that decisive. It is still strong global demand, particularly from emerging economies like China and India, that causes escalating oil and energy prices. In addition to that, the trade embargo imposed by the American to some large oil-producing firms, like Iraq (4th largest oil producer), Venezuela (biggest oil supplier in America), Iran and Afghanistan, constraints supply in the world market.
Currently, several economies had experienced a runaway inflation last month, and analysts are predicting a much higher inflation rate in June. A galloping inflation rate could lead to social unrest, a warning given by the World Bank in the Global Development Finance 2008 study.
But what I am worried about is that when the situation persists, this may create a hyperinflation scenario, or a scenario where inflation continuous to increase despite economic growth declines. And hyperinflation usually happens during times of war!
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