As usual driving back from work is probably the most productive time of my day. The long quiet drive on that long bumpy highway allows me to think…a time to reflect on life and things that happen around the world today. Thought of something last weekend and decided to write about it to share with you what`s going on in this lil` brain of mine.
It`s only been three months in 2008 but already we have seen some interesting trends both from the local and international spectacles. One interesting phenomenon which is very close to my heart is this ever increasing oil price in the world market today. One thing leads to another..every single news item seems to trigger the price to go up…starting from the Iraq war in 2003, then all diff types of hurricanes , refinery fire in US, BP leaking pipelines.. Political tensions in Nigeria and Iran, then the shortage of supply and surge of demand in India and China and of course now the weakening US dollar.
The last I checked the price was USD 106. The minute that it breaks that USD 100 barrier nothing will stop it to go up higher. We were always under the impression that we are lucky that the fact we are an oil rich country we are safe guarded from this impact….but it begs the question..Are we?
The trend in the local news today slowly seems to indicate that this is not the case…just trying to pull the facts together …the announcement of coal energy sources in Brunei, plea to reduce usage of electricity, hints of possibility of a rise in gasoline price, pressure on Govt oil subsidy, rise in the price of basic necessities and recently the announcement of the rise in air flight prices and err e-speed reduce to B$68/mth?.. It`s all seems to bog down to the issue that the impact of increasing oil prices is slowly affecting us one way or the other.
At the global scale this issue is even worse. One would expect, as oil is priced in USD, higher price of oil will increase demand for USD and this effectively should make it stronger..but this clearly is not the case. USD seems to get weaker causing frustration to Oil producing countries as their revenues are not growing with the increasing demand of oil in the market forcing them to increase oil price further. The credit crunch issue in US can`t be more perfectly timed causing more speculation of recession and thus further weakening the USD. Just imagine..how much more Brunei will make if we decide to shift to sell our oil in Euros rather than USD. Tempting but unfortunately we are not that big to be able to influence such decision. I am not surprise if probably If sometime in the near future the big Arabs boys out there finally decided that its not sexy to tag their oil price to USD but to tag it on Euro instead. That might be one quick fix to this issue…I think.
The list goes on. Back in school, I remember of being taught an unusual scenario in which once the price of oil reached a certain level..the high investment on super technology seems to be feasible to cope with the high oil prices. Hey guess what...lucky you economics students out there…you are living in that world today. You must have heard on the term bio fuels…basically an alternative to oil using food stuff such as sugarcane, corn or maize. Those buggers actually did manage to convert these into fuels causing a sudden demand for these crops and basically responsible for the increase in the price of Gardenia bread and egg (not sure why..Bread eats with egg maybe or bio-fuels include chicken). Luckily it`s not as simple as putting those “jagung” or “sugarcane” into the fuel tank..if not those guys selling them at stadium during puasa will be a millionaire by now.
Another interesting development is also on how Oil companies are competing to extract more to ensure there is abundant supply to justify their existence (and perhaps mine too). Shell for example recently announce their latest breakthrough in Oil production from sweeping the oil off the ground by layering off the rich Tar sands in Alberta, Canada. It is anticipated that the potential reserves from this non-conventional oil is six times more than the Saudi`s current reserve and able to accommodate the world thirst for oil for the next century.
There are actually more to this but I do not wish to bore you any longer with these facts and details. Just another random fact…from a random clicker.
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