Tuesday, July 1, 2008

Runaway Prices, and Sound-Bites ...

They are kicking up a political storm. And, everyone is left wondering what hit them. I am reading so much about fuel prices, and combine this with the uncertainty around the 123 Agreement, that it seems almost as though the foundations of modern democracy are being shaken. Of course, one of the things anyone would be Hoping for would be restoration of the normal way the world goes round.

However, not many of the soundbites are pointing to this direction, as more and more of the high and mighty folks are busy pointing fingers and allocating blame for this situation, rather than trying to sit together and find a solution which is beneficial to the entire world. Sound bites which are coming through dont sound too encouraging, either ...

There is an article in the Times of India titled OPEC Chief Rules Out Return of Price Band. Interesting reading. According to this, the CEO of Royal Dutch Shell believes its hard to prove that the financial markets have anything to do with the price rise. While that may be, common sense ... There hasnt been any drastic change in either demand or supply side, so why such drastic changes in prices? Basic economics would suggest no such reason should exist. More interesting is the CEO of BP saying ...

Speculators believe in the fundamentals... the era of cheap oil is over as expanding economies like China and India are boosting demand.


Interesting ... I just did some back of the envelope calculations ... based on information presented in two sites ... Consumption data from NationMaster and indexmundi, and population data from wikipedia paints a picture quite different. Of course, these are all back of the envelope calculations, and dont represent exact figures, but the point is, that the per capita consumption of India and China is 10% of the American figure. Also, if we look at total consumption numbers, there is a difference of a magnitude of 10 between the two numbers. About time someone looked at the entire picture rationally?

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