The truth about high oil prices.......

I find it bewildering that while the masses are suffering from increased oil prices, oil companies are literally laughing to the banks; http://news.bbc.co.uk/1/hi/talking_point/1167984.stm http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=429878&in_page_id=3 http://themalaysianinsider.com/index.php/malaysian-news/34-malaysian-news/1841-petronas-posts-record-profit-of-rm61b The reason for the oil companies to laugh is because they are consistently reporting new record breaking profit levels that dwarfs many nations GDP. And these oil companies justify their profit levels because they say oil is in limited supply. That is, what they (oil companies) want you and the rest of the world to believe in.

With the media drumming up the fact that 'the world will run out of crude oil", (http://www.cnn.com/2003/WORLD/europe/10/02/global.warming/) I beg to differ. The world will not run out of crude oil supply but it will run out of easily accessible crude oil. That means oil companies need to venture out further and deeper to extract oil and at a higher cost and risk. But I don't see any oil companies announcing that they will be venturing further and deeper into the ocean to extract oil thus increasing the cost of oil extraction leading to higher oil prices now. In fact, not a single oil company in the world dares to venture to deep sea oil exploration and / or extraction due to many unknown factors involved. So this possibility will not be considered, for now. Perhaps this possibility for causing oil prices to skyrocket is likely in year 2025-2030. Let's explore the next possible reason for oil prices to shoot sky high....

Some say that oil price increase was due to the fact that demand for oil spiked http://en.wikipedia.org/wiki/Oil_price_increases_since_2003 but was it really the cause? If the demand for oil spiked suddenly, why then did OPEC say that they will not increase production? http://news.xinhuanet.com/english/2008-04/23/content_8035466.htm Extracted from the article:

OPEC Secretary General Abdullah al-Badri dismissed such demands as unfounded; claiming more oil on the market would not mean lower prices and the hike in prices had nothing to do with supply and demand. "OPEC will not hesitate to increase production if we think the higher price is caused by the shortage of oil in the market, but we are confident that it's not a shortage of oil. It's something else," said al-Badri.

Now that we have heard from the horse's mouth that there is no shortage, which means that there wasn't a spike in demand, that leaves only one possible reason for the oil increase: speculators. Surprisingly, there has been a barrage of articles defending speculators: http://www.newsweek.com/id/143786 http://www.realclearpolitics.com/articles/2008/07/lets_shoot_the_speculators.html http://www.heritage.org/Research/EnergyandEnvironment/wm1998.cfm http://www.investorsinsight.com/blogs/forecasts_trends/archive/2008/07/08/are-quot-speculators-quot-controlling-oil-prices.aspx

Since it is crystal clear that NOBODY (whether it is OPEC, or oil companies, or speculators) is to be blamed for the high oil prices, perhaps we should really think whether or not we have been misled all these while. Perhaps we should really reflect whether we have done enough to bring down oil prices. Sure, there are more gadgets that save petrol for your car but no one seems to forget that with high oil prices, we are buying fewer items with the same amount of money because everything went up in price! I don't see anyone coming up with a gadget that says "Enjoy 30% more tomatoes at no additional cost".

The truth about high oil prices is simple: GREED.

Think about it - the oil companies are making mega bucks and are reinvesting their profits to generate better returns, OPEC members are investing their easily attained oil profits into emerging economies for higher yields, and speculators are channelling their profits for a quick return.

Who is to be blamed? Apparently in this day and age of nanotechnology, there is no room for logic. Logically, high oil prices will hamper economic growth. Logically, high oil prices will drive inflation up. Logically, with low economic growth and lower purchasing power due to high inflation, it will drive employment down. Logically, with high unemployment, crime rate will shoot up. Simple logic isn't it? No? Uh, I forgot. All these aren't in $$$$$.

Can someone explain to oil companies, OPEC, speculators and governments? That would be the Corrective Action.