John Kerry has been on the stump, blaming President George W. Bush for the rise in oil prices. In a speech in Santa Fe, New Mexico, Kerry said, "Right now, oil prices are at an all-time high, with no end in sight," citing it as George W. Bush's record on oil. The speech he gave in Santa Fe was full of rhetoric that placed the blame on the higher oil prices, solely on Bush's shoulders.
This is a much skewed vision of what the oil crisis is caused by, unfortunently, too many people are buying into the idea that it is Bush policy that is pushing up the price of oil. What is interesting is that Kerry has an exclusively multilateral prospect for his foreign policy plans, but when it comes to energy management, it becomes completely unilateral. The Kerry campaign cannot possibly be that naive to actually believe that the war in the Middle East is the singular catalyst for the surge in oil prices.
The most recent surge in oil prices, from reaction to the war, came at around $47 per barrel. Today, the prices stands at $52.51 a barrel. The $47 is a big increase in crude oil prices, but it was a cap following a cut in oil prices a few months ago. For that cut, the Saudi government took a stand with OPEC and pushed for lower prices. Senator Kerry believes President Bush manages the oil business to benefit only his friends - when in fact, the Bush friendship with the Saudi government helped in getting that initial cut.
If a multilateral vision is made on the oil crisis, it is clear that Iraq has a part in prices situation, but there is a lot more to it that brought the numbers above $50.
The demand for oil around the world has surged, not just in the United States, but in nations like China and India. China is the world's fastest growing economy, along with the largest population. China's demand for oil has gradually grown to the point it is at today and has now added to demand surpassing the amount oil producers can output. In order to lower oil costs, Bloomberg reports, China has since switched energy sources to other methods, such as coal. This, in efforts to lower oil prices.
India has seen one of the largest oil product consumption, with a 5.1% rise in in consumption, since September. Diesel sales are also up by around 9%.
One of the biggest issues facing oil production today is the Nigeria strikes. Nigeria is the largest African exporter of oil, and has since been bogged down with strikes, and extended strikes, that have hampered the government's ability to manage the oil industry. According to "The Boston Globe", rebels are threatening "to take back the oil-rich Niger Delta oil fields is peace talks with the government fail". This rebellion has caused the city of Lagos, Nigeria's largest city, in a supposed "lockdown", since rebels have destoryed residents cars and means of travel, leaving people trapped in their homes, unable to go to work.
The jump in oil prices has also sparked a strike in Nigeria. Royal Dutch/Shell, who produces about 1 million barrels per day for Nigeria says, "The strike has not affected output. The strike should only last four days".
Another country cited by "The Boston Globe" is Russia, who's "oil giant", Yukos, has been hit with fines and penalities that add up to a grand total of $7.5 billion. The government's pusuit of the company's back taxes are taking a toll the companies ability to produce.
"The Times of India" reports that Norway, the world's third largest exporter of oil, has also had its share of production slowdown, as of July, 200 off-shore workers have been on strike. Norway's oil production is down by 2%.
The United States also has a role in the oil price srge, but it is not policy related, moreso, because of a hurricane named Ivan. According to "Voice of America", Hurricane Ivan's arrival in the United States "shutdown almost all oil production from off-short platforms in the Gulf of Mexico last month". Platforms and a pipeline have been damaged from the hurricane and has also contributed to the struggle for cheaper oil. James Burkhard of the Cambridge Energy Research Assosciates says "Over the past decade, we have typically had up-to-five million barrels a day of spare production capacity, today that cushion of spare production capacity is just about 1.15 million barrels per day".
Bloomberg expects a cumulative rise in global consuption to be about 3.4% - surpassing expectations. With the rise in demand, and the slowed output, there is no question that the product will be a surge in oil prices.
A simple equation of economics spells out the rise in oil prices. The anomalies around the globe, and the wrath of mother nature have all gathered to create a pretty meager oil supply, to satisfy the growing demand all over the world. This is not a sole product of a war in the Middle East, and saying that Middle East oil is the only source of oil, is a completely incorrect assumption. Before blaming the Bush administration for the hike in oil prices, and the pain at the pump, the United States is not the sole bearer of grievances with oil, and that the world is suffering, not because of the War on Terror, but a collassal jumble of debilitating world events.
This is a much skewed vision of what the oil crisis is caused by, unfortunently, too many people are buying into the idea that it is Bush policy that is pushing up the price of oil. What is interesting is that Kerry has an exclusively multilateral prospect for his foreign policy plans, but when it comes to energy management, it becomes completely unilateral. The Kerry campaign cannot possibly be that naive to actually believe that the war in the Middle East is the singular catalyst for the surge in oil prices.
