Australia: Under the pump

IT WAS not just motorists who were in for a shock as the the price of oil passed $US103 a barrel for the first time in history on Friday. The soaring price of “black gold” is likely to affect everything from airline travel and taxis to investing, and even what you can afford to put on your dinner table.

AMP Capital Investors’ Shane Oliver calculates that while the strong Australian dollar is helping to offset higher energy prices, motorists will soon be forking out at least $1.50 a litre for unleaded petrol if world oil prices stay around current levels.


Despite some expectations of slightly lower demand due to slowing global growth, most analysts say the oil price won’t fall any time soon. The reason is that even if demand does slow, it will be offset by a rush into crude futures that provides an investment haven from the sagging US dollar, says Victor Shum, an energy analyst with Purvin & Gertz in Singapore, who warns of an emerging price bubble.

Even without an increase in these speculative investments, Goldman Sachs reckons oil could hit $US105 a barrel this year. Germany’s DIW research goes further, tipping $US150 within five years and rising to $US200 in 10 years.

The Age