Cheaper oil is already fuelling the next spike

LESS THAN six months ago analysts were predicting that the days of $200 oil were not far off. Over the first half of the year, increasing demand, driven by consumption in rapidly growing economies such as China and India, forced oil prices past $100 a-barrel and close to $150 in July.

This was against a background of collapsing equity markets that forced investors into safe havens such as commodities, putting further upward pressure on prices. The problem reached the point where the US Senate held an inquiry into what was happening to oil prices as the country’s gas-hungry motorists began to feel the pinch.


Witnesses from the industry itself blamed “speculators” and “hedge funds” , the same people who became whipping boys for falling stock markets and the near collapse of the US banking system. They ignored the fact that demand and inventories played a far bigger role in determining prices.

Oil and natural gas are used to generate electricity in the Republic. Crude oil prices set the benchmark for both fuels. From a consumer’s point of view, a sustained rise in crude prices means higher petrol, electricity and gas bills. Like their American counterparts, Irish motorists and consumers also paid the price. Petrol went to