For months, the OPEC has scrambled, with little success, to keep a lid on oil prices. With war threatening as the cartel's ministers meet in Vienna, Austria, this week, prospects for the global economy are so cloudy, analysts say, there is not much left for OPEC to do.
The oil producers are not alone in their plight. Around the world, and especially in the US, the problem of planning for the unknowable is upsetting the decisions of consumers, businesses and investors. That is hampering an economy struggling to better last year's meager growth, weighing on stock prices and subduing consumer spending.
Oil is a significant component of all those calculations. Crude oil prices have hit their highest levels since the Persian Gulf War of 1991, and S&P's estimates that high energy prices have cost the economy US$50 billion in consumer purchasing power, or 0.5 percentage point of growth, just since last fall. The Energy Department predicts that by April, consumers will be paying record-high prices for gasoline in much of the US.
In any effort to assess how prices will move -- and how the economy will react -- the echoes of history are inescapable. Just like in the fall of 1990, the massing of American troops near Iraq and fears that oil supplies from the Persian Gulf will be disrupted have pushed the price of oil well above US$30 a barrel for weeks.
But moste similarities end there, according to industry analysts. While few experts expect a war to lead to shortages of oil, most doubt there will be a replay of the events of the Gulf War.
Most analysts say that key indicators of the oil industry's health -- notably low inventories of oil and petroleum products at American refineries -- suggest that prices will remain steep regardless of military action.
A year-long series of production cuts by OPEC last year gradually reduced global oil supplies as world economies were growing stronger. Then a strike in Venezuela stripped 4 percent of the world's oil supply from the market. So the balance between supply and demand is much tighter than it was on the eve of the Gulf War.
Today, a war in Iraq would remove about 2 million barrels of oil a day from the market, analysts estimate. Some believe that OPEC, which does not disclose its production, has the spare capacity -- concentrated in Saudi Arabia -- to replace that oil. Others say they think the cartel's members are already pumping at full capacity, both in an effort to keep prices from spiraling even higher, at the risk of stifling demand, and to take advantage of the unusually high prices.
Ultimately, the price of oil will likely swing with the progress of a war, analysts say.
RESPONSE: The transit sends a message that China’s alignment with other countries would not deter the West from defending freedom of navigation, an academic said Canadian frigate the Ville de Quebec and Australian guided-missile destroyer the Brisbane transited the Taiwan Strait yesterday morning, the first time the two nations have conducted a joint freedom of navigation operation. The Canadian and Australian militaries did not immediately respond to requests for comment. The Ministry of National Defense declined to confirm the passage, saying only that Taiwan’s armed forces had deployed surveillance and reconnaissance assets, along with warships and combat aircraft, to safeguard security across the Strait. The two vessels were observed transiting northward along the eastern side of the Taiwan Strait’s median line, with Japan being their most likely destination,
‘NOT ALONE’: A Taiwan Strait war would disrupt global trade routes, and could spark a worldwide crisis, so a powerful US presence is needed as a deterrence, a US senator said US Senator Deb Fischer on Thursday urged her colleagues in the US Congress to deepen Washington’s cooperation with Taiwan and other Indo-Pacific partners to contain the global security threat from China. Fischer and other lawmakers recently returned from an official trip to the Indo-Pacific region, where they toured US military bases in Hawaii and Guam, and visited leaders, including President William Lai (賴清德). The trip underscored the reality that the world is undergoing turmoil, and maintaining a free and open Indo-Pacific region is crucial to the security interests of the US and its partners, she said. Her visit to Taiwan demonstrated ways the
GLOBAL ISSUE: If China annexes Taiwan, ‘it will not stop its expansion there, as it only becomes stronger and has more force to expand further,’ the president said China’s military and diplomatic expansion is not a sole issue for Taiwan, but one that risks world peace, President William Lai (賴清德) said yesterday, adding that Taiwan would stand with the alliance of democratic countries to preserve peace through deterrence. Lai made the remark in an exclusive interview with the Chinese-language Liberty Times (sister paper of the Taipei Times). “China is strategically pushing forward to change the international order,” Lai said, adding that China established the Asia Infrastructure Investment Bank, launched the Belt and Road Initiative, and pushed for yuan internationalization, because it wants to replace the democratic rules-based international
WAR’S END ANNIVERSARY: ‘Taiwan does not believe in commemorating peace by holding guns,’ the president said on social media after attending a morning ceremony Countries should uphold peace, and promote freedom and democracy, President William Lai (賴清德) said yesterday as Taiwan marked 80 years since the end of World War II and the Second Sino-Japanese War. Lai, Vice President Hsiao Bi-khim (蕭美琴) and other top officials in the morning attended a ceremony at the National Revolutionary Martyrs’ Shrine in Taipei’s Zhongshan District (中山) to honor those who sacrificed their lives in major battles. “Taiwanese are peace-loving. Taiwan does not believe in commemorating peace by holding guns,” Lai wrote on Facebook afterward, apparently to highlight the contrast with the military parade in Beijing marking the same anniversary. “We
RSS