Oil price boom another view

Adam had a post yesterday on an article from The Times on the oil price. The Economist has an article as well with a different take.

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THE price of oil may soon hit $200 a barrel—or so, at any rate, believes Shokri Ghanem, Libya’s oil minister. A few years ago such a prediction would have seemed absurd. But the price has doubled in the past year and has risen by 40% this year alone. It touched yet another record, of over $135 a barrel (before dipping slightly) on Thursday 22nd May. So more spectacular increases seem all too plausible.

The article discusses some of the causes and politicians reactions:-

Mr Ghanem’s explanation for this curious state of affairs is to blame speculators, who are investing ever more enthusiastically in oil futures.

It notes Sen Lieberman in the US agrees and wants action against index funds, but the Economist suggests he and Mr Ghanem may be misguided.

The article goes on to suggest that this may not be the case, rather issues of supply and demand; plus issues related to oil field productivity and investment and issues with producers.

Instead of hectoring speculators, perhaps Mr Lieberman should be hounding Mr Ghanem and the leaders of other oil-rich countries to allow foreign oil firms more access.

Clearly there are divergent views as to cause and effect.