Nightmare of high oil prices

Throw away all those theories and formulas. Even the mighty OPEC is baffled by the continued record-breaking rises in oil prices, even as it insists that its little black book says there is enough oil being pumped out of the ground to cover what is being consumed by the world’s economies.

Crude oil prices just broke new levels this week, and we now have a fuel that is more than a third higher than what it was at the start of the year. There is no war in the Middle East, no significant damage to refineries, and no world-threatening crisis that gives plausible excuse for its recent anomalous rise.
Based on extrapolations, or what economists refer to as the price of crude oil without factoring in inflation over the years, prices today have not yet breached the $90 peaks reached during the 1979 Iranian Revolution. It’s small comfort to note that we seem to be slowly inching towards it – and there’s no World War to blame it on!

The Organization of Petroleum Exporting Countries or OPEC, created in 1960, is the world’s dominant fossil fuel supplier, accounting for over 45 percent of crude oil production and 18 percent of natural gas. Pre-OPEC, crude was sold at less than $3 a barrel.

Back then, a liter of gasoline in the Philippines was to be had for mere centavos, and any incremental movement in the price of pumped fuel at service stations, however minute, triggered Congressional hearings and the outpouring of student activists and jeepney drivers to the streets.

With wild swings in crude prices, we again see a volley of “experts” on the global energy sector with an updated set of slides that remind eager audiences just how vulnerable developed economies are on fossil fuels. Time has humbly taught anyone who attempted to “predict” tomorrow’s crude oil price to just shut up.

The hardest fact to swallow with everything that is happening now is that we have barely a say in it. We are mere spectators watching a tableau where bigger forces are at play; all we can do is sit tight and hope that the ending is not one that is tragic.

ABS-CBN