Rising Petrol Prices

The most important argument, why gas prices are high is because oil is a non-renewable resource. Petrol has been artificially cheap throughout its entire history, and people got used to that. Now think about the damage, which petrol causes to the environment. This shows that we are losing money and also polluting the environment.

 

Rising petrol prices in all the major consumers like USA, Australia, England i.e. the developed nations and the developing nations like India, China etc. has literally spoilt the slumber of many. The rise in petrol prices is basically a rise in the price of crude oil on NYMEX where the futures contract for “light sweet crude” has gone up from $20 per barrel at the end of 2001 to over $130 per barrel today and is sure to cross the $150 level.

 

The White House, as usual, has denied taking the responsibility of this. According to Bush’s government the developing powerhouses India and China, which are pressurizing international markets for more supplies of oil, are driving up the prices and hence the decline in oil reserves in recent years has increased all the more.

 

Nobel Laureate Joseph Stieglitz however argues with this as he feels that this pressure on oil supplies by nations like India and China, though increasing steadily has not drastically affected oil prices. Rather the hike in oil prices comes out as more pronounced only after the Iraq War. So here crops up the debate on the appropriateness of the Iraq War again. Seems like Bush has to suffer hard times for the mistake that he made in Iraq. Another argument in Peaking of oil supplies. The economics behind this does indicate the possibility of rise in oil prices with simultaneous peak in world oil supplies. Existing oil field are approaching their peaks while future sources of oil are expensive to access. Moreover the number of such oil fields is fast declining. Natural calamities like Hurricane Katrina which supposedly destroyed 109 oil platforms in the Gulf of Texas (according to US official figures) is also no excuse. So everything boils down to the Iraq War. Statistics show that before the Iraq War in 2001,Iraq was pumping 2.5 million barrels of oil per day.

 

Before the war US vice president promised the world that Iraq would return to pumping 3 million barrels per day by 2003.This never happened and also by January 2006 it recovered up to 1 million barrels. So a loss of approximately 2 million barrels everyday is what the world has experienced. No other oil producing nations among the “OPEC countries” has been able to compensate for the loss and Iraq’s oil pipelines continue to diminish in number as Iraqi resistance continues to destroy them.

So the present conclusion is that the world is paying a heavy price for a mistake Bush and his decision makers made. Maybe its high time we start using the known alternative resources.