It's the oil, stupid.
Oil prices have hit a record $68 a barrel after the US reported a fall in gasoline stocks, while China said its crude imports had risen sharply.
Fears that tropical storm Katrina might hit production in the Gulf of Mexico also pushed the cost of oil higher.
US light crude touched $68 a barrel in Asian trade on Thursday before slipping back to $66.95. In London, Brent crude hit $66.56 before falling to $65.69.
Demand from the US, China and India is expected to keep oil prices high.
Maybe the price of oil will drop back when the American driving season finishes. Maybe. One politician suggested that the price of a barrel could hit $100 by 2012. To me that sounds incredibly optimistic. The price of a gallon in the good ol' USA is currently around $3, half of what it costs here in this septic isle, and they're already deluging the phone-ins on the radio stations complaining. It's going to be quite a shock when they start to realise that high oil prices are here to stay, and are likely to get higher year on year. Maybe the US really should take Pat Robertson's advice and put a price on the head of our friend Hugo Chavez, especially after his latest comments that he might supply cheap fuel to poor Americans:
President Hugo Chavez of Venezuela hit back vigorously at calls by an ally of President George Bush for his assassination by offering cheap petrol to the poor of the US at a time of soaring fuel prices.
In a typically robust response to remarks by the US televangelist Pat Robertson, Mr Chavez compared his detractors to the "rather mad dogs with rabies" from Cervantes' Don Quixote, and unveiled his plans to use Venezuela's energy reserves as a political tool.
"We want to sell gasoline and heating fuel directly to poor communities in the United States," he said.
Venezuela, the world's fifth largest crude exporter, supplies 1.3m barrels of oil a day to the US. It remains unclear how poor Americans might benefit from the cheap petrol offer, but Mr Chávez has set up arrangements with other countries for swapping services in exchange for oil. Cuban doctors are working in the poorer areas of Venezuela in exchange for cheap oil going to Cuba.
Jamaica yesterday became the first Caribbean country to reach an agreement with Venezuela for oil at below-market terms. The Petrocaribe initiative is a plan to offer oil at flexible rates to 13 Caribbean countries. Jamaica will pay $40 a barrel, against a market rate of more than $60.
Mr Chavez said oil importers such as the US could expect no respite from the oil market, predicting the price of a barrel would reach $100 by 2012.
I'm pretty sure that such talk is simply rhetoric, as you can imagine the huge outcry about subversion and infiltration within the States if such a proposal actually became reality. However, that doesn't stop the main thrust of Chavez's point. The real power soon could be in the hands of those who have the oil. China has been making deals around the globe with countries such as Sudan and Iran which the United States is loath to work with. It all depends whether they decide whether to do business with tyrannical regimes, or take the easy route and bomb them into submission. At the moment, it appears to be advantage China and Chavez.
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