Tuesday, June 10, 2008

Oil prices


Malaysia announced on June 4 that the country’s retail fuel prices would be raised by an average of 47.8%. Amid surging world oil prices, Malaysia is the fourth economy in the region to decide to raise domestic retail fuel prices recently; the others are India (10-15% on June 4), Taiwan (13-16% on May 28) and Indonesia (25-33% on May 24).

Will China be the next to hike retail fuel prices? At it stands now, China’s domestic retail fuel prices are only about half of the international benchmark levels. This means that if China’s domestic retail fuel prices were to be allowed to converge to international levels, they would need to rise by 70-90%, depending on the product type.


That is a large number; they will probably wait until after the Olympics to raise prices.  The systemic slowdown is spreading around the world; we could see a dramatic falloff in demand over the coming year. Let prices do what they always do is change supply and more importantly change demand.  

I hope to have the final numbers regarding oil, but I am sticking with 150-200 dollars a barrel. At that price, oil becomes too expensive as a major source of energy...  The trend that accelerated in 1998 is still on tract... Oil, uranium and coal prices are heading higher, and alternative prices continue to fall.




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