A Series of Oil Price Increasing Events

By this time, my 100 pesos would put lesser amount of gasoline into my fuel tank and of course, I’ll be having lesser mileage because of that as local oil companies have once again increased pump prices yesterday. Probably, this is the immediate result of what had happened about a week ago, when world crude prices obtained an all-time high at 81 dollars to a barrel.

And thus, the law on oil prices remains true. When world oil rates increases, local oil companies are so quick on their guns, increasing local prices as immediately as possible. And when world oil prices decreases—-somehow happening once in a blue moon—-local companies are so slow to react and in readjusting local prices accordingly, posing excuses such as old inventories bought previously at higher prices are still the commodities that they are pumping out of their gasoline stations. It’s worst than Murphy’s Law I tell you.

81 dollars. That’s an all-time high and it’s noteworthy of reiterating while as we speak now, some sectors are even predicting further escalation of world oil prices. The main cause of the recent increases is being blamed at the seemingly lackluster production of OPEC and it seems that the oil-producing countries are not so inclined to increase production as Qatari Oil Minister Abdullah bin Hamad al-Attiyah even asked this question, “What if I increase production and nobody buys it?”, referring to the dilemma allegedly faced by OPEC producers nowadays. I wonder if he is ever knowledgeable about a more universal law on supply and demand. If he increases production and not everyone would buy it, at least crude prices would go down globally and this would help the world economy from being hammered by energy deficiency, and thus avoiding widespread economic malaise. It doesn’t take a rocket scientist to realize this. In the event a 100-dollar per barrel becomes imminent or even appertaining, to be sure there’d be a global economic meltdown nobody wants that to happen.

In light of this, I can sense that OPEC is just being reactionary to Asia-Pacific Economic Forum’s recent declaration on emission reduction by as much as 25% by 2030. Despite that the Sydney Declaration is mostly non-binding (not mandatory to signatory nations), it still remains a very strong move towards decrease in carbon-producing activities, or lesser use of fossil fuel as a means of production and transportation. By then, OPEC would foresee lesser selling opportunities as manufacturers would be opting for other sources of energy (what exactly they are we are not still sure at this time) for industrial production and transportation. Maybe, emission reduction would mean more use of bio-fuels and more hybrid cars on the road. OPEC would surely have lesser customers in that situation.

Is the recent increase in world oil prices (reaching a level never-before breached) merely a reaction of OPEC to APEC’s emission reduction move? We are not so sure by now, but the timeliness of recent events makes me think this way.