Thursday, 24 February 2011

Oil prices continue to rise. Is Peak-Oil time coming?

The world economy could be in for a massive shock as oil prices continue to rise.

Oil strategist at Nomura, Michael Lo, estimates that oil prices could top $220-a-barrel - almost double today's high of $119 - if both Libya and Algeria halt production as a result of political unrest.
He told The Daily Telegraph: "We could be underestimating this as speculative activities were largely not present in 1990-1991."

The oil price increases, coupled with such warnings, spell danger for economic recovery, as inflation feeds through the supply chain.
RMI Petrol, the body which represents fuel retailers, said prices demanded by wholesalers have risen "an unprecedented" 3p-a-litre so far this week and that increase is set to feed into pump prices by the weekend.
As it stands, the average price for a litre of unleaded is 128.9p, with diesel 134.3p.

The cost of filling up has soared as a result of higher oil and taxes
It is estimated that Libya's daily output of 1.6 million barrels has already been cut by more than half because of the uncertainty there.
Three major foreign producers, Eni, BASF and Winthershall, have turned off the taps.
Together they produce 450,000 barrels a day.
One of the largest tribes in eastern Libya has threatened to cut off exports from the port of Banghazi unless the violence against pro-democracy protesters stops.
Another tribe, based south of the capital Tripoli, has also turned against Colonel Muammar Gaddafi's regime.
Saudi Arabia has said it could produce an extra four million barrels a day to make up any lost capacity and help keep prices stable.
But that has done nothing to stop the speculators and limit the sense of market panic.

The political unrest is already hitting oil deliveries
The biggest fear is that the turmoil could spread across the Middle East and North Africa, which together produce a third of the world's oil.
RMI Petrol chairman Brian Madderson told Sky News: "RMI Petrol predicts that rises will filter through to petrol forecourts over the next few weeks, leading to an estimated 5p per litre increase by April 1."
He has called for April's planned fuel duty increase to be frozen and for the Government to introduce structures so duty falls when oil prices rise.
Chancellor George Osborne has said he is considering a fuel duty stabliliser.

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