I’m back. To my early morning routine, walking, with a little skip every now and then, loving the fresh scent of the eucalyptus trees where I go for my walks. It is a great way to relieve stress. The only thing that is disturbing is the sign at the petrol station. Which, in our leafy Sydney neighbourhood shows the price of gasoline at $1.45 per liter. It seems, while no one is looking with the EU dramas going on, oil is back to $100 levels. At another time, people would be wailing and complaining about this. But it’s all very “quiet” even in the news. What’s going on????
What has changed?
- Is it the demand? Who’s been buying new cars ? Or taking long road trips?
- Is it the supply? This year saw the “Arab spring” challenging governments and altering the supply dynamics in the region. Iran had been in the headlines and lately the North Korean leadership change = nuclear threats not going out of style. The other thing could be disruptions to oil production like what happened to that Russian oil platform accident (which by the way could happen more often, given that oil companies have to increasingly go farther offshore). There is that other thing – environmental dangers to the way oil is being sourced.
- Pricing in the world markets – Oil is priced in US Dollars. Now with the EU dramas happening, EU keeps getting dumped making US Dollars more valuable one day, then reverses the next, depending on whether “fixes” are dreamed up by the power players. The way it works (usually), if US Dollar purchasing power is strong, the oil price is supposed to be lower. BUT, there is a lot of see sawing going on, the US also need to print money due to its own spending and debt problems, which pulls down USD’s value, don’t expect a solid run up for the US Dollar.
I think you’d agree with me, that it’s a combination of reasons. But the disturbing thing indeed is that people are – wait for this — getting used to it, or resigned to this fate.
Now, I don’t know about you, but if this goes on, be prepared to be walking or taking public transport, or take a hit for other spending allocations (ie. shopping). Ouch.
Time to invest in some oil shares? I’ll let you in on some companies you can look at to invest in to be better prepared for a slippery 2012! Sssshhhhh.
Ssssshhhhh - Nur'aini by Andie Makkawaru
