Oil prices yesterday climbed above a record $80 a barrel after the U.S. government reported a large drop in crude inventories and declines in gasoline supplies and refinery activity.
The Energy Department’s Energy Information Administration said oil supplies are tightening as demand remains strong. That’s why oil prices are rising despite OPEC’s decision on Tuesday to boost crude production by 500,000 barrels per day this fall, analysts said.
The news is likely to boost and should be taken as as incentive for the search of alternative fuel types, whose prices are becoming increasingly competitive.
Biopact has an insightful article about the price rise from the perspective of developing countries, the ones who suffer most from such rises. It said,
…high oil prices are outright disastrous for developing countries and are already hitting them. The ‘global economy’ is dominated by a handful of highly industrialised countries whose economies are robust and can cope easily with volatility in energy prices. But for oil importing developing countries, representing more than 2 billion people, the situation is entirely different. Their economies are energy intensive and each increase in oil prices affects all productive segments of society immediately. Abundant and cheap energy is key to development. Scarce and expensive energy is detrimental to progress. The correlation is one of the best established relationships in development economics. The generic ‘human development index’ strictly correlates with the ‘energy development index’.
The full article is here.
