The blog has gained important support for its view that oil prices are too high. and threaten the current economic recovery.
In an interview with the Financial Times, the chief economist of the International Energy Agency (IEA), Fatih Birol, has spelled out its view that “oil prices are entering a dangerous zone for the global economy.”
The IEA estimates oil costs in the OECD richest countries have jumped $200bn to $790bn over the past year, reducing OECD GDP by 0.5%. The OECD accounts for 65% of all global oil imports, and Birol reminded OPEC that “oil exporters need clients with healthy economies. But these high prices will sooner or later make the economies sick, which would mean the need for importing oil will be less.”
He also called for OPEC to increase production, in order to bring prices down to more sustainable levels, adding they need to “show their understanding that these high prices are not good for the global economy.” Otherwise, he warned, current “price levels could bring us to the same financial crisis times that we saw in 2008.”
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You could see recently that oil fell in price in conjuction with other commodities when investors started to favor stocks. So it seems that oil is still being used as a speculative investment, and the price not necessarily being governed by supply and demand.
Should those in the Middle East pump more oil for us? Maybe. But we also need to get the US government off of the stop button on the Gulf of Mexico and other prime development sites. We also need to not abandon coal as an energy supply. There is just too much meddling going on in the energy supply system.