There as been decrease in production of all goods and services observed through out th world. One may say that the reason for this is due to the finacial crisis, the decrease can also result from the increase in the energy prices.
Historically, the oil prices has been increasing significantly, the explaination for this is due to the lmited supply of oil, which decreases the supply of the oil every time we use it. However, increase in the demand for oil can also be the driving force for the price increase.
In this article, China's demand for oil will determine the prices of oil next year. As china plays a singificant role in the demand for oil, increase in the oil demand for China can easily increase the oil prices. Although production for all countries around the world is expected to significantly decreased as financial crisis is expected to continue, it is projected that China would remain on the growth path. This may rise concerns regarding the price of oil as all countries are facing difficulties in the Economy. Increas in the energy prices would bring further damange to the economy.
I feel that as no one firm has the ability to increase their production, increase in the energy prices would bring further damange to the economy by further reduing the production. I believe that it would help significantly for all countries if any policy regarding subsity towards energy are implemented.
2 comments:
If their economy does continue to grow and not become greatly affected by the financial crisis then I agree completely with this article, but if they are affected just as much and start cutting back then who knows.
Supplimenting my previous post about China... They are a powerful country and they may soon be a serious force to be reckoned with. Watch out United States!! Their patience and strategy seem to be paying off sooner than later.
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