hey youguuuuys!

$67.32 - That was the New York closing price of crude oil last night. It’s also a nominal record. Why should you care? You, personally probably shouldn’t at the moment, but I’ll tell you about it anyway. The record it actually broke was reset on the 12th August, although it is only 22 cents more. Why is this happening and what does it mean? Well at the moment supply and demand are perilously close to each other. Basically, there’s about a million extra barrels a day produced to cope with any surges in real demand, so that’s why the markets are so shaky. Traders are buying up stock, anticipating an upsurge in demand, however this perpetuates the problem. Then you have rising prices creating a rise in general prices, where really, there needn’t be.

The fact that the U.S. Department of Energy announced that stocks had fallen by 2.3m barrels instead of the expected 1.5m sent shockwaves throughout the commodities markets. If this situation continues to perpetuate then it doesn’t bode well for the world economy at large, so what’s the alternative?

The U.S. Government, quite ironically some might say, has invested U.S. tax payer’s money into researching alternative fuel technologies. One of the main areas have been hydrogen fuels which are pollutant free and would greatly reduce the problem of fuel scarcity which sees prices rocketing and the environment suffering. This is all well and good, however the problem lies within the incentives or the drive behind the decisions to research these areas by the U.S. government. The reason the current administration gives is that they would like to reduce their dependence on foreign sources of fuel. This is worrying as the U.S. is the world’s largest economic power and if they reduce the level of imports it will have a detrimental effect on the world economy at large.