In a recent interview, the president of OPEC claimed that the current price of US$100 (S$143) for a barrel of crude oil is 'not necessarily very high'. According to Mr Chakib Khelil, Algeria's Energy Minister, who took over the rotating presidency of OPEC, said that current surge in oil prices must be seen in relation to the real price, taking into account inflation rates.
As I go about doing my day to day business, complains I hear everywhere are usually about the rising general price level of commodities. Taxi fares, medical bills, groceries, in fact almost everything seems to cost more lately. In the opinion of many, inflation taking place here seems to be attributed by rising oil prices. I might be missing something here, but which is causing which to rise?
In other regions around the world, rising oil prices are triggered by the increase in oil demand by China and India and Middle East whose consumption has risen immensely. Higher production costs also played a part in pushing up the oil prices.
An interesting note pointed out by the OPEC president, when taking into account the above factors, US$100 is not necessarily very high. In fact current oil price is well below its 1980 record of between US$102 and US$110. Surges in price are believed to go on until the end of the first quarter of 2008, before stabilising during the second quarter.
What a way to get the year started. Lets hope the approaching Lunar New Year brings about better fortunes!
"Time heals what reason cannot." - Seneca
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