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Friday, September 5, 2008
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4 comments:
interesting.. clearly, oil markets operates on fear. Political situation in the area is threatening the oil prices to go that high and threatening consequently, the economy as a whole. Dont be surprised if the oil price today is gonna be cheap compared to tomorrow's... I remember a couple of years ago I was telling someone dont be surprised if oil price per barrel reaches USD100!!! And that wasnt long ago you know? All political problems and instabilities can send crude price higher and higher
A simple way is to think of the demand/supply... Oil demand is inelastic
And in Kuwait it wont affect us.. I mean the situation and stability and all of that... the price is protected by the government
The sub-prime crises has caused the US economy to decline,and the repeated softening of the interest rate made the Dollar weaker. Money moved away from bonds and into riskier investments.
Add to that alternative fuel & political tension to the equation and
you got yourself high oil prices.
In Kuwait oil prices re protected by the government.
"Exxon Mobil's Profit in 2007 Tops $40 Billion - washingtonpost.com"
In return rise of oil prices is affecting high inflation in the GCC countries. Because as we all know GCC countries dependent on imports from outside and higher oil prices pushing them to raise the price of commodities.
A good solution for GCC countries is to invest & develop non-oil sectors,
(an example for that is Logistics in Kuwait) and a good solution for western countries is to develop alternative fuel (Ethanol).
For now I'm enjoying my Gas prices in Kuwait, I pay $15 to fill my V8 when my brother pays $90 to fill his in the states.
AIK
Thank you Ansam for your input.
No problem :-)
I am loving your blog!
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