The price of a barrel of oil has jumped
up from $45 to nearly $70 in just
three months. And gas prices have been
creeping up too. Rebecca Williams reports
these prices are out of sync with the usual
rules of supply and demand:
Transcript
The price of a barrel of oil has jumped
up from $45 to nearly $70 in just
three months. And gas prices have been
creeping up too. Rebecca Williams reports
these prices are out of sync with the usual
rules of supply and demand:
Right now there’s a huge glut of supply of oil – and at the same time, weak global demand for it.
Ruchir Kadakia is a global oil market expert. He’s with Cambridge Energy Research Associates.
He says speculators are driving oil prices up.
“People believe that with positive economic growth in the future there will be greater demand for oil. So they start to buy up oil in anticipation of that demand recovery.”
So these speculators are making money while most of the economy is in a slump.
But Kadakia thinks the realities of supply and demand will eventually catch up and drag oil prices back down.
“The pain we’re feeling at the pump today is probably going to be the worst we feel all this summer.”
He thinks gas prices might actually get back below two dollars a gallon.
For The Environment Report, I’m Rebecca Williams.