Motorists can be expected to pay more for fuel soon as crude prices soared again to nearly $77 a barrel.
Turmoil in the international oil markets — due to strong demand, geopolitical instability and a shortage of refining capacity — will put further upward pressure on forecourt prices. Huge profits are expected for oil companies such as BP and Shell, which report their half-yearly financial results next week. ExxonMobil, which also reports next week, has just become the world’s first company to be valued on a stock exchange at over half a trillion dollars.
The long-term outlook for the global economy seems bleak — without any concomitant relief for the environment. The International Energy Agency (IEA) said last week that it was raising its oil demand forecasts and warned there could be shortages in supply up until 2012.
US crude oil surged again on Tuesday by 91 cents to $75,06 a barrel in trading on the New York Mercantile Exchange while the North Sea benchmark oil, Brent blend, was being valued at $76,45 — barely $2 short of its highest ever level.
Global demand for energy from all sources is expected to increase over the next decade by around 1,5% to 2,5%. Meanwhile, supply is being held back by a number of factors — not least the policies of the Opec (Organisation of Petroleum Exporting Countries) oil cartel, which restricts production levels of its member countries in order to maintain price levels.
Violence in Iraq and Nigeria and the rising tide of resource nationalism from Russia to Venezuela has disrupted oil and gas output.
Continuing conflict in Iraq has also reduced output while the stand-off between the US and another major Opec producer, Iran, over the latter’s nuclear programme has raised fears of supply disruption and fed into rises in the crude price.
Refining capacity has also failed to keep pace with the growth in oil demand and key US refineries have been out of action in recent weeks amid breakdowns that some attribute to them being run too hard.
The major oil companies are rushing to get into the biofuels sector but they will continue to make the vast bulk of their profits from selling carbon-based products. — Â