Creating people's geographies
Revised with additions
Two short news report video clips from Al Jazeera and the Real News Network cast some light on why the price of oil is so high at the moment, and how it is affecting ordinary Saudis even in the world’s largest oil exporting country, as it is affecting ordinary people everywhere.
In short—and notwithstanding the basic demand outstripping readily available supply—it is speculators, not Saudis, who are tipping the price up according to what these news clips suggest.
Aside from market manipulation, other important factors that weigh in on the high price of oil include geopolitical tensions (in the main, belligerent Bushmert noises against Iran) and government taxes. (Video h/t: Informed Comment)
Who’s to blame for price of oil? (3 minutes)
Who profits from Gulf oil revenues? (2 minutes)
Ron Paul on Iran & Energy (C-SPAN 6/26) (6 minutes)
F. William Engdahl (‘Perhaps 60% of Today’s Oil Price Is Pure Speculation‘ 2 May 2008) writes that:
As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. . . . Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the ‘tail that wags the dog.’
OPEC President Chakib Khelil has himself cited the US dollar’s decline and political conflicts in his prediction that the price of oil will climb to US$170 a barrel before the end of the year:
“Oil prices are expected to reach US$170 as demand for fuel is growing in the US during the summer period and the US Dollar continues to weaken against the Euro.”
Political pressure on Iran and the depreciation of the US currency have caused a surge in oil prices, Khelil said.
In Why We’re Suddenly Paying Through the Nose for Gas, Michael Klare writes:
… But the Administration’s greatest contribution to the rising oil prices is its steady stream of threats to attack Iran if it does not back down on the nuclear issue. The Iranians have made it plain that they would retaliate by attempting to block the flow of Gulf oil and otherwise cause turmoil in the energy market. Most analysts assume, therefore, that an encounter will produce a global oil shortage and prices well over $200 per barrel. It is not surprising, then, that every threat by Bush/Cheney (or their counterparts in Israel) has triggered a sharp rise in prices. This is where speculators enter the picture. Believing that a US-Iranian clash is at least 50 percent likely, some investors are buying futures in oil at $140, $150 or more per barrel, thinking they’ll make a killing if there’s an attack and prices zoom over $200.
For a view that places geopolitical tension rather than speculation squarely in the centre, from Xymphora’s blog:
Turning up the tension has been an ongoing process. Every few months there is a new baseless rumor about an American-Israeli attack on Iran, an attack which the oil markets know would result in an Iranian response which would lead to (at least) $300-a-barrel oil. It is this tension which is ratcheting up the price, not oil shortages or speculation. The Old American Establishment isn’t behind this, as it will be massively damaged by the kind of world recession that higher oil prices are leading us to.