Escalating Global Demand Pushing Oil
Posted on: Thursday, 22 May 2008, 09:01 CDT
The rocketing price of oil has U.S. consumers confused as domestic demand has leveled off and prices still climb, industry analysts said.
People don't get it, U.S. Sen. Herb Kohl, D-Wis., said in a The Washington Post report. Demand is not crazy. Why are prices going crazy?
With the recent turn toward smaller cars in the United States, biofuel mandates in place and gas flows relatively stable, consumers are wondering what is pushing gas and heating oil prices.
Experts point to the weakening U.S. dollar, which makes commodities a target for inflation-wary speculators. But, most point to escalating demand in emerging markets, especially China, as pushing oil prices.
World demand is growing robustly when world supply is not, chief economist of CIBC World Markets Jeffrey Rubin told the Post.
Rubin said demand in China has is rising at an annual rate of 12 percent.
With demand pushing up against supply capacities, the price of oil is quickly affected by events such as an earthquake in China, which disrupts coal transportation there and causes a spike in the demand for oil, the Post reported.
Source: United Press International
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