The oil market saw a new consumer enter the fray yesterday, and as a result black gold did something of a surge, moving back up to $54.8, four dollars up on the end of last week.
Who is this new consumer that has caused oil to rise so high? We know all about China and India buying more of the black stuff; does it mean new pricing pressure for the future?
Uncle Sam is the new entrant. At least, US Energy Secretary Samuel Bodman said yesterday that George W. Bush wants to double the size of the country’s emergency oil reserves by 2027.
At present the emergency reserve has 737 million barrels, but from the Spring the plan is to buy 100,000 barrels a day.
Although the theory behind the US idea is good - meaning that the country is less vulnerable to future shocks, history tells us that whenever the US has increased its emergency stock pile, the price of oil has gone up.
Meanwhile, Mr Bush made his annual state of the oil industry address yesterday. Actually, it is called State of the Union, but a year ago he famously said the US was addicted to oil. Now he is calling for a 20 percent reduction in gasoline consumption within ten years, and much greater use of bio fuel.
It’s funny how interests can converge. Mr Bush is worried about US reliance on oil supply from less stable areas of the word- it all fits in with his war against terror.
Yet, by following this policy, he is also going some way to make the green lobby happier. Only some way that is, as many believe that bio fuel is no more friendly to the environment than oil, although its use is of course much more friendly to US farmers.
Comments
Trackbacks