Volatile Oil Prices Subject of Forum

…Oil prices aren’t just rising, “but the volatility is also worsening-fluctuations are more pronounced than they were in the 1990s,” says WBI Senior Economist Yan Wang, the task manager of the forum.

“Unlike the previous oil shocks which were largely supply induced, price hikes this time reflect growing energy demand in emerging markets especially China and India. International capital flows seeking investment opportunities in the face of a declining dollar have also played an important role.”


The price of oil has escalated much more than expected. “It’s caught most by surprise,” says World Bank Senior Energy Economist Shane Streifel, a panelist at the forum’s session on whether high and volatile prices are here to stay.

That’s happened even though oil stocks around the world are not “critically low,” and oil output by the Organization of the Petroleum Exporting Countries (OPEC) has recently edged higher.

Streifel says the oil boom of the last few years has been driven by a combination of factors: the loss of oil surplus capacity, “moderate” demand growth worldwide, with developing countries, especially in Asia, offsetting falling demand in OECD countries; disappointment that non-OPEC supplies have not increased in larger quantities; rising costs; and OPEC’s cuts in production-most recently by 1.5 million barrels in 2006 and 2007.

The World Bank