For Saudi Arabia and other oil producing countries these prices are indeed bad for business.
Economic theory dictates that with prices this high, an extremely large amount of people will seriously reduce the amount of gasoline they buy. The lesser the price the more they buy. It has always been a KSA policy (not sure if OPEC takes the same stand) to keep a barrel of oil around $30 to $50. They make more money than they know what to do with off of those prices and it keeps supply and demand in check.
As the minister rightly says, speculators looking to make a quick easy buck on a commodity are a huge problem. Speculators will purchase LARGE amounts of oil, sit on it to create an inflated price by reduced supply figures. In fact, speculators do this on any commodity they can to make a quick easy buck. Of course there is the risk of loss but in this game they seem to be happy with the risk and aiding in alarming levels of inflation.
Of course as has been mentioned before on this forum the weak American dollar is the other problem in this economic equation. It takes more American dollars to buy a barrel of oil or any other product on the market. The dollar has declined substantial amounts over the past 5 to 6 years. Almost 50% to the Euro!!
The world would do itself a favor by pricing oil in another stable currency like the Euro but this would sink America as a world power and she will give wrath to any nation dong so....
For Saudi Arabia and other oil producing countries these prices are indeed bad for business.
Economic theory dictates that with prices this high, an extremely large amount of people will seriously reduce the amount of gasoline they buy. The lesser the price the more they buy. It has always been a KSA policy (not sure if OPEC takes the same stand) to keep a barrel of oil around $30 to $50. They make more money than they know what to do with off of those prices and it keeps supply and demand in check.
As the minister rightly says, speculators looking to make a quick easy buck on a commodity are a huge problem. Speculators will purchase LARGE amounts of oil, sit on it to create an inflated price by reduced supply figures. In fact, speculators do this on any commodity they can to make a quick easy buck. Of course there is the risk of loss but in this game they seem to be happy with the risk and aiding in alarming levels of inflation.
Of course as has been mentioned before on this forum the weak American dollar is the other problem in this economic equation. It takes more American dollars to buy a barrel of oil or any other product on the market. The dollar has declined substantial amounts over the past 5 to 6 years. Almost 50% to the Euro!!
The world would do itself a favor by pricing oil in another stable currency like the Euro but this would sink America as a world power and she will give wrath to any nation dong so....