Thursday, November 5, 2009

Why The Price of Oil Rises

I've always wondered why the price of gas at the pump ('petrol' in Britain/Zimbabwe) keeps rising. Here in Northern California I've gone from paying about $1.61/gallon in 2001 to over $3/gallon today. I've never believed the experts I hear on TV talking about "troubles in the Niger Delta", or "security tensions in the Persian Gulf". I've always thought that there are more complex issues at play. Here's Prince Turki Al-Faisal, the former Director of Saudi intelligence, giving his take on the continuing rise of the price of gas/petrol.

Prince Turki Al-Faisal - "The sad fact is that four oil-producing countries [have] failed to live up to expectations. In 1998, Iran, Iraq, Nigeria, and Venezuela, were producing 12.7 million barrels per day. Everyone - including major companies such as BP and our own planners at Saudi Aramco - expected them to be producing 18.4 million barrels per day in 2008. Instead, due to civil strife, failed investments, or in the case of Iraq, a U.S invasion, they were producing only 10.2 million barrels per day. That drove the price part of the way up. Then speculators in the form of hedge funds, did the rest."

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