Sarkozy’s proposal on fixing price deserves attention

Although the call came from none other than French President Nicolas Sarkozy, the call failed to generate the ripples that it truly deserved. The call was significant in more ways than one, to say the least. An opportunity seems open, waiting to be seized.

While talking to foreign diplomats based in Paris, Sarkozy came out with a rather unusual proposal: Fixing the crude prices at a level acceptable to both the producers and consumers.

“It is in everyone’s interest to regulate the prices of raw materials, not just oil, not just gas, but all raw materials,” said Sarokozy.

Crude could definitely be the first candidate for any such arrangement, and there are definite reasons for that. Wide swings are no good for anyone. Crude markets have a history of oscillating between extremes over short periods, bringing anguish to many and pleasure to virtually none in the overall process. This is a cyclical business in a real, real sense. Crude behaves much as any other commodity with wide price swings in times of shortage or oversupply, with the price cycle extending over to several years responding to changes in demand as well as OPEC and non-
OPEC
supplies. Adjustments to the ever-changing realities then become extremely difficult and problematic both for the consumers and the producers.

Zawya