Oil Prices Top $126 A Barrel

May 9, 2008

Today the price of oil kept going up, up, up. The price of oil topped previous records and is now more than $126 per barrel. This represents and increase of over 11% from the beginning of May. The rapid increase in price was due to massive enthusiastic speculation over oil, and to concerns over impending scarcity of supply.

Geopolitial events share a large part of the responsibility for the rising oil prices. For example, the supply of crude from Nigeria and the North Sea was interrupted earlier in the month, prompting investors to keep buying oil shares.

In Europe, quickly growing markets have led to taxed power grids and a resultant need for diesel-powered generators–meaning a need for more crude oil.

Financial analysts expressed trepidation at the recent surge in oil prices. Tatsuo Kageyama, working with Tokyo-based Kanetsu Asset Management, said that although “lingering geopolitical fears and high heating oil prices are helping the market… the speed of the rise is too fast.”

One big target of criticism relating to the oil situation has been OPEC, the Organization of the Petroleum Exporting Countries. OPEC has been widely criticized for allegedly being responsible for the high oil prices. OPEC itself claims that the oil prices are so high only as a result of oil-crazed investors and the plummeting value of the dollar.

Nonetheless, OPEC has assured the media that it will try to increase the available supplies of before September of 2008 if the prices keep going up, in an attempt to stem the price surge. According to the Ecuadorian oil minister, OPEC will have to raise the amount of oil available in the market by at least 500,000 barrels of oil daily.

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