Why is oil (price per barrel ) going up and up?

Question

Why is oil (price per barrel ) going up and up?

Answer 1

they have to pay for the war in iraq

Answer 2

I remember during the 1998 Asian Financial Crisis, the value of most Asian currencies came down and down. Money speculators, hedge Funds managers and Investment Bankers made huge amounts of profits at the expense of those poor Asian countries which had gone almost bankrupt. Those big speculators contended that they are not to be blamed for their speculations on those Asian currencies. Those Asian countries went almost bankrupt because of their lack of Reserves and poor economic fundamentals. Now 10years had passed, those speculators contend that the reason for the price of oil going up is mainly due to their practices of 'fair trade'. And governments cannot challenge this practice, but they can take their share of the profits made in the form of corporate taxes

Answer 3

Its a culmination of foriegn policy of some western goverments and some eastern countries economic striving to catch up with the west. And profitering.

Note how much of the wests energy needs (oil) are reliant on reserves in the middle east.  Since 9/11 a war of a unique kind was begun.  Terroism has shown its most ugly face yet,defying all comprehension.  Causing uncertainties and fear.  Pipelines are cut in asia,middle east and the eastern block.  add to this that it is thought of the current oil being drilled is at a depth of 1.5 miles.  Current technology to drill for deeper reserves is prohibitive due to the extra cost involved.

Countries like China, India and Pakistan with some of the denses population are striving to catch up with westinised country.  This has created a new industrial revolution the size of which hasn't been seen before.  These countries need to run heavy plant as well as normal plant domestic and industrial at an ever increasing rate, in order to meet their own economic forcast.  This need to grow causes a huge strain on the planets resources.  And when you consider that there is only a finite amount of these resources,scarcity will push the price up.

It isnt just oil that has gone up.  All of the earths natural elements have increased in price dramatically over the last 6/7 years.

But, oil, and its possible scarcity is used most often to acknowledge an otherwise fairly desperate situation.  Oil not only fuels our cars and lorries.  Its many constituents are used in 95% of plastics/paints.  Its a lubricant,a source of heat,energy.

The answer to your question is both simple and complicated.  We live in unprecidented times.  Geo-politics are effecting areas of our lives we all once took for granted.

Answer 4

1) They are blaming some investors go into invest in oil, and the  oil market is heating up subject to further spikes.

2) The weak in dollar will contributing to the rise in oil prices. We need a stronger dollar, dollar-denominated commodities prices higher .

3) Oil prices believe have continued to rise.

Answer 5

Turn on CNN..

Answer 6

Speculation.

profiteering

demand

Answer 7

Personally, it is due to speculation in oil market.

Answer 8

Because the oil resource is going down and down

Answer 9

1.  cheap money/credit/low interest rates

2.  the dollar is falling.

3. speculation.

4.  hedging of inflation though commodites

Answer 10

ITS NOT. the price of oil has remained fairly constant when compared to another limited quantity. (like gold) the value of the american dollar continues to fall and as a result of each dollar being worth less it buys less oil.

Answer 11

They claim it is due to the weakening Dollar,inflation in most countries and etc.But I guess we can blame it all on OPEC which is a monopoly hence decides the prices!

Answer 12

It is a combination of several reasons but I sum them up into 3 big issues:

- First, supply and demand. During the last few years, the rise of emergent markets (china, india ...) and their growth, was accompanied by an acceleration in their consumption of oil and other commodities. Today, US consumption, as a share of world consumption, is shrinking, because, Chinese (second after US) are becoming wealthier and more affluent, they want to drive cars, live in suburbs and want to keep on their growth, all adding up to an explosion in consumption (higher demand is equal to highe prices). From a supply stand point, there is an issue/ speculation that the world is witnessing or close to peak oil (that is we are close to the maximum production we can ever have, and oil production is poised to decline in the near future). Add to that the most of the produced oil is "heavy" which means that it needs more refinaries, and we are currently having problems with refineries so that even if the Saudis increase production, there isn't enough refinery capacity left to process the additional oil. Add to that all war mongering and political risk in the middle east and the possibility that some oil countries or companies are manipulating/ hoarding inventories and you have very tight supply of oil (that is higher prices).

- The second reason is that oil all over the world is priced in dollars (considered world reserve currency) which is losing its value since at least 4 years now and accerelating. The devaluation of the dollar is related to many internal and external factors. In the US, the increasing inflation is causing the dollar to devalue (not the inverse), because inflation is an increase in the supply of money by the Fed, which later on shows up in prices of things you and I buy. The Fed was following this kind of inflationary/ expansionary monetary policy for many years, especially when Greenspan tried to save wall street in 2000. Add to that that a decrease in interest rates is also bad for the dollar and it is also inflationary. Bernanke, in an attempt to save wall street, again, from the subprime mess, slashed rates to 2% (below rat of inflation, which is, banks are paid to borrow money) and did not even dare to raise them last week even if he said he is concerned about inflation (look how oil price thursday and friday shooted up after stagnating for 2 weeks when the Fed said they are not increasing rates). Also, the dollar devalue because of relative weakness of the US economy ...

- Because of the first 2 reasons, and because huge amounts of money tried to flee stock and bond markets because of all pending problems, the only safe haven they saw can save them from inflation and from falling markets are commodity markets. Add to that huge liquidity pumped by the Fed into banks (trying to save them) which ended up in the commodity markets instead of equity and mortgage market (the Fed swapped half of its balance sheet of treasuries against worthless mortgage backed paper to save some banks from imploding - so now if you take $1 bill, half of it is backed by your neighbors full faith to pay his mortgage and the other half by full faith in the government to pay its debts - which I doubt too). All this liquidity flooded the oil futures markets betting without taking delivery and driving prices even higher.

Things get even tricky going forward. Bernanke is doomed to change interest rates in either direction, and doomed to keep them (especially if the ECB increases their rates). Market participants are loosing all confidence in the Fed and in the government, which is the only thing that keeps things from falling apart. Even if US goes into recession, this does not necessary mean lower oil prices, because China and other countries will just fill the slack and that most probably oil exporting countries would decreases production leaving supply/ demand in a very tight equilibrium.

And I suspect a crash in oil prices will be even more dangerous for the US, as banks who are loosing money on all fronts, invested heavily on the oil market, the only profitable so far, and if prices go down, you can kiss many of them goodbye.

To be continued ...