Protests are being held all over the world, asking for subsidies mainly due to the expenses incurred from the price increase of fuel. Scotland is in the grip of a new crime wave with organised thieves stealing tens of thousands of litres of fuel each day from farms, homes and petrol stations across the country. Record oil prices have made fuel a targeted commodity for gangs of criminals. One must be reminded that this is not gold and we are commenting on, but black gold.

Crude oil prices have been rising steadily, with more drastic hikes recently. Just two years ago we wouldn’t even dream that it is now accepted to pay $150 a barrel. The prices have now risen to a point from which we are expecting oil to reach even $200 a barrel. Oil is no commodity; to some extent it affects what the word commodity means to us. At times like these we start realising how precious this raw material is, and the levels of dependency we have become accustomed to.

The price of oil influences all economies – from transport, to manufacturing, to restaurants and shops, to the family home. This non-renewable source of energy is our only realistic source at this moment in time. The fact that it is non renewable is a big problem. Renewable sources of energy like the sun and wind are unlimited, whereas fossil fuels are limited. Some may argue that they are not as limited as others make us believe, but yet whatever the quantities of deposits are, they are still a limited source. Different views are circulating, as fingers are being pointed in all directions.

Experts also reached a consensus that the recent soaring prices should be attributed to financial factors rather than the commodity itself. The devaluing dollar pushed a large amount of money into such commodity markets as oil and gold. This led to people saying the problem was not that oil was too expensive, but the dollar being too cheap

During the debates on why the oil prices surged so high, most Western oil consuming countries said the situation has largely resulted from supply shortage, and they blamed OPEC for refusing a production increase.

On the other hand, OPEC members rejected the accusations from the consuming countries, and blamed speculators for inflating oil’s rally. They said that the West should focus on the speculators pushing the price up before it is even extracted, thus adding volatility to the trade. They have demanded further regulation of future markets to give a blow to speculators. They also attributed the price hike to the weaker dollar and escalating geopolitical tension rather than the imbalance between supply and demand.

It is said that the American Federal Reserve board left the interest rates unchanged only to please the Saudis who requested the Americans to do something to shore up the dollar. If this is true then the Saudis managed to interfere in the American monetary policy through their influence on the oil production.

As countries like China and India are pushing demands to new heights, the supply has not changed significantly. This has sent prices rocketing, together with instability in the middle east, conflicts, misadministration in certain countries, and last but not least speculation. These gave rise to the $150 barrels we are dealing in today, a price that more than quadrupled in the space of two years. And the wild unpredictability of prices will blunt the effect of dear oil on people’s behaviour, and what commodities they afford or not.

The 1970s showed how demand and supply, inelastic in the short run, eventually give rise to conservation and new production. It is no coincidence that car companies are suddenly accelerating their plans to sell electric hybrids that are far cheaper to run than petrol or diesel cars at these prices. The first two oil shocks banished oil from power generation. How fitting if the third finished the job and began to free transport from oil’s century-long monopoly.

Prices for crude oil, as one of the most important strategic resources and basic raw materials, would be influenced by not only supply and demand but also geopolitical developments, global economic outlook, climate policies, population and stock market, experts generally said, thus calling for a joint responsibility. Every grey cloud has a silver lining. The centre of gloom and doom, black gold too may have its silver lining. Leaders are accepting that these prices are here to stay. We must take the silver lining and think about the earth’s sustainability, focusing more on renewable resources and lifestyle changes that allow us to depend less on fossil fuels, and saving more energy.

The current surcharge must be adjusted to the reality of the current oil prices. At the moment we are living with the oil prices of last year, but we must accept that our country too must adapt to the present circumstances. It is not only we that oil prices are affecting, but also the whole global economy. It is a universal problem. Nonetheless we are still doing well on the financial and economic fronts, and we shall strive to keep on providing the best opportunities and environments for this country to extend its success.

David Casa is a Nationalist MEP

[email protected]

www.davidcasa.eu