Enough is enough! The million-dollar question now is how far the increasing oil prices will take us down! The world economy, especially for the underdeveloped and developing countries, has already seen the heat of the rising fuel prices. Though, no immediate relief can be guaranteed in this regard, going by the market developments and experts’ opinions, it would seem that the time has come for the rising oil prices to give a break to its ever-expanding life expectancy.
Contrary to popular belief, it is now being accepted by the world leaders that financial hearsay was not mainly responsible for the recent unabated increase in oil prices; though, the main cause of the surge is yet to be discovered, analysts say.
A recent analysis has shown that demand for oil has really not increased in recent times to become a cause for the exponential growth of oil prices. So, what caused the oil and food prices to soar? It is the expectancy, they say, towards higher consumption of oil by the developing countries in the near future that caused the artificial shortage of fuel in the world market leading to steep increase in oil prices. If such a theory is to be believed, the sheer rising of oil prices is likely to slow down soon. Seeing the strong pursuing economy of the developing countries, people have become afraid about future oil demands and became suspicious about the future oil prices amidst such high oil demand.
Another possible reason that has caused oil prices to rise is the speculation about Russia and Mexico’s hidden intentions of lowering oil production in the near future that might affect adversely the oil supply chain. The report is yet to be investigated, but the notion has significantly contributed towards increasing the oil prices. Such speculation cannot last long and people’s fear about the same will soon vanish giving high relief to the soaring oil prices. Though, the decreasing of oil prices, in all probability, is unlikely, the ongoing steep rise of oil prices should come to a halt very soon.
The Market economy is complicated and difficult to negotiate. Even human behaviors affect it greatly. After giving rise to the debate of the food crisis world wide, human behaviors and their perception had changed that ultimately gave way to the speculations of future insecurity, which led oil owners to increase the oil prices.
The debate on food scarcity had given birth to a new risk of higher consumption of oil which set alarm bells ringing in the oil fields causing immediate increase in oil prices. Now, the dust of speculation seems to have settled and thereby it would seem that oil prices should drop or stabilize.
Members of the Organization of Petroleum Exporting Countries (OPEC) have a great role to play in reducing the steep rising of oil prices. The oil owners should maintain a balance between the oil demand and oil production. Business and operation of the OPEC is further a function of the interest rate, which also contribute largely in deciding oil prices.
If as believed a few mere speculations had actually caused the sudden increase in oil prices, a similar but reverse action may help oil prices to come down. Nobody knows for sure, but if America is able to draft a policy showing less consumption of oil in the near future, the increase of oil prices may stop. Also, to curb the price hike syndrome, the US may initiate such a step at any time now. Even otherwise, it is not possible that a commodity can sustain a continuous increase in its prices, which against the norms of market economy.
To cope with the consequences of steep rise of oil prices, different countries of the world have already started oil saving projects, thereby limiting their future oil requirement. If expectancy for future oil demand reduces drastically, the present trend of increasing oil prices should come to a halt.