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World Crisis scenarios for the 21st century – Peak Oil. (update 10)

Posted by Adrian on April 15, 2008

World Crisis scenarios for the 21st century – Peak Oil. (update 10)

Oil continues on with record breaking highs now at 113.79

refer to new high close of trade April 15th 2008 –

This is a steady climb, with the US Dollar declining in value and high inflation; it’s a no brainer that the commodity markets, particularly scarce commodities (such as oil) are used as a hedge against inflation. With constant deprecating value in the capital markets and asset market the commodity/oil market is an attractive investment.

A flip side of an appreciating oil price is the indicator that Opec may maintain it’s output levels at a rationed rate. China and India will both put pressure on the oil price. Both developing economies will gobble up as much of the resource that is available. No matter how dramatic the slow down will be in America, oil will continue to rise thanks to a combination of rate cutting by the Federal Reserve, and dwindling supplies that may just reaffirm the peak oil theory that oil is running out globally.

This of course effects everything in an oil dependent society. With global inflation out of control, particularly on foods such as rice and wheat. Inflation on oil from an ‘peak oil’ perspective can grind a society to a sudden halt, or exasperate a depressive economic downturn.

From bloomberg,

“China, the world’s second-largest energy consumer, increased diesel imports as state refiners China Petroleum & Chemical Corp. and PetroChina Co. bought more to ensure supplies for the spring planting season.

Chinese oil demand this year will rise 4.7 percent to 7.9 million barrels a day, the International Energy Agency said in a report on April 11. Demand in the U.S., the world’s biggest- energy consumer, will contract 2 percent to 20.38 million barrels a day this year.

No Plans

OPEC has no plans to review output levels before a scheduled meeting in September, though ministers will have an opportunity discuss the oil market with consuming nations at an International Energy Forum in Rome scheduled for April 20-22.

“We are not producing enough oil,” U.K. Prime Minister Gordon Brown said today on Sky News in London. “We can take collective action to persuade OPEC and others to get the oil price down.”

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