Thursday, March 3, 2011
Unrest in the Middle East: The Price of Fear
The world economy has felt the tremors of volatile unrest in the Middle East and North Africa at an ever-increasing rate in 2011. Eruptions of turmoil in important geopolitical and oil-rich nations like Egypt, Tunisia, and most recently Libya have caused oil prices to soar. This informative article explains that the price of oil is not just reliant on the traditional economic conventions of supply and demand, but also the impact of fear in speculation can have. As evident in current gas prices in the United States, declining reserves of the world's supply of oil paired with unrest in civil society emerges peaks hovering around $120 a barrel today. It will be interesting to see if the development of new revolutions across places like Bahrain or Saudi Arabia will have on the future prices of oil.
Subscribe to:
Post Comments (Atom)
7 comments:
I agree with the article by saying that there is a fear factor when it comes to setting the price of oil. The world understands that oil is not going to be around forever and that it is time to begin buying and conserving oil, which drives up the price per barrel. It will be interesting to see what alternative energy can do to help this crisis.
On the point of oil running out and buying it up now - I recently ran across an article that said one recent oil price rise was because the U.S. and a couple other countries are stocking up on oil for their reserves (not exactly an incentive to make us look into green energy).
I would imagine US stocking up on oil would lower prices domestically compared to the rest of the world, and I do agree that fear may play a part in the price of oil. However I do not see this unrest ending anytime soon and I would imagine it to spread throughout the middle east. America and the rest of the world will have to accept the rise in oil and move onto greener technologies.
I am concerned about the political instability in the Middle East and its implications on the oil price. The oil price is bound to increase anyway because there is a growing demand for it, notably China and India meanwhile the oil supply is pretty much limited. I can imagine this could be a start of a green energy industry. Inflation is going to be a big issue when it comes to rising oil price. I think that should be addressed quickly.
The oil price issue should be addressed quickly as mentioned before but the problem is that it has to be with universal policies which we know is impossible. Growing demand of oil is directly correlated to more cars being used in all countries. If all countries increased car sales taxes this problem would naturally go away, but realistically that is impossible.
I agree that it is unlikely that the unrest throughout the middle east will be coming to an end in the near future. Rather than fear, countries around the world need to use this to prepare for what is potentially to come. I think the best course of action is continually increasing green energy policies through international organizations and policies holding the international community accountable in their efforts to decrease their dependence on oil. In my opinion this is the only viable option in the long run.
The direct effect can be easily seen from the increasing oil price of the nearby gas station...The incrase in oil price has also greatly affected the airfares. The round-way flight to China used to be around $1300 last year but now it's rised to $1700...
Post a Comment