Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page: http://www.socialistparty.org.uk/issue/359/5912

From The Socialist newspaper, 21 August 2004

Oil prices set to rock world economy

WORLD LEADERS are showing considerable worry about the continued rise in oil prices. On 10 August, US light crude broke the $45 a barrel mark, the highest price ever in New York. Oil prices have risen 30% this year alone.

Kevin Parslow

The fear of capitalist business people, politicians and economists is that such a high price will end the current world economic upswing. With interest rates rising internationally, businesses are facing much higher costs in the next few months.

For most people, the most immediate effects are the extra pennies put on a litre of petrol or the surcharges put on holiday flights by big airlines. But if big business makes workers pay for the price hikes with redundancies and rises in the cost of living, then a much broader effect will be felt.

Why are we seeing big price increases now? We are seeing an exceptional meeting of problems on both the supply and demand sides of the oil market. On the demand side there are two main factors: the world upswing and China's massive economic expansion. The world upswing, particularly in the USA, has produced a greater demand for oil than forecast. America's drivers are also driving more gas-hungry vehicles than before.

China's desire for oil is phenomenal; its massive economic growth, in comparison with the rest of the world, has produced an increase in demand for oil of 20% in just the last year. If this economic growth comes to a sudden halt, this demand will fall back substantially. But until then its thirst is almost unquenchable.

The problem for oil importers is that only Saudi Arabia has reserves that can be made available to the market.

Supply and demand

The problems on the supply side can be summed up in one word: instability. Too many of the major oil producing nations and regions are amongst the hottest of the world's 'hot spots'.

Iraq, suffering under the effects of US-led occupation, has to reduce or turn off oil exports whenever the chaos becomes too fierce. Iraq has the second largest reserves in the world. And the recent attacks in Saudi Arabia by groups linked to al-Qa'ida have caused turmoil too.

Other oil producers are adding to the global uncertainty. The Russian government has chosen to launch an attack on giant oil company Yukos this year, threatening to sell off its assets to pay outstanding 'tax bills'. Venezuela, the western hemisphere's biggest oil producer, has been in the midst of the referendum campaign to decide whether President Chávez remains in office. Nigeria, Africa's largest producer, has faced strikes against rises in the cost of domestic oil, compounded by ethnic clashes.

Turmoil internationally is the last thing the world oil markets need. The only crumb of comfort for the bosses is that if the $40 figure reached in 1980 following the Iranian revolution was measured in today's prices a barrel of oil would cost $80!

Nevertheless, a $80 barrel is not beyond the imagination, particularly if the situation in Iraq continues to go against US imperialism.


IN THE UK, higher oil prices should mean bigger revenues.

However, North Sea oil production peaked in 1999 and is declining. In fact, since June this year Britain has been a net importer of oil, the first time in eleven years.

Moreover, a weak US dollar over the last 18 months (oil is priced in dollars) has contributed to the fall in UK revenues.

In June, net oil revenues only amounted to a £22 million surplus down from its May 1985 peak of £1.5 billion.

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.


In The Socialist 21 August 2004:

Warning: Public Sector Under Attack

Action needed across the public sector

New Labour at war with firefighters

The fighting spirit that saved a pit

Know your rights

Europride Manchester: Stop bullying and discrimination


International socialist news and analysis

Resistance in Iraq

Oil prices set to rock world economy

Armed intervention in Sudan must be opposed

Venezuela referendum - corrupt elite lose again

Boston: Hundreds pack Ralph Nader meeting

Building for a socialist world


Workplace news and analysis

Swansea staff fight outsourcing

Yorkshire bus drivers: Determination pays off


 

Home   |   The Socialist 21 August 2004   |   Join the Socialist Party

Subscribe   |   Donate  




Related links:

Oil:

triangleHurricane Harvey: A tragedy made far worse by capitalism

triangleTories and Blairites in pockets of big business: kick them out!

triangleTory oil spoils v poisonous air

World economy:

triangleBuilding workers' struggle and the forces of international socialism

triangleBuild 100 days of resistance to Trump's agenda!

Economy:

trianglePowerful picture of the Port Talbot steel workers' struggle

triangleYoung people being strangled by debts

triangleNationalise to save jobs at BAE Systems

US:

triangleObesity epidemic: end food market anarchy

triangleSwansea Socialist Party: Mother Jones - A US labour pioneer

Iraq:

triangle'From Militant to the Socialist Party' - new book now available

Reports and campaigns

Reports and campaigns

19/10/17

North West

Arriva North West bus drivers strike over pay

18/10/17

Democratic rights

Conference on state spies: who's watching who?

18/10/17

Leeds

Striking back against sackers' charter at Leeds Uni

18/10/17

Royal Mail

Royal Mail bosses block strike - back postal workers

18/10/17

PCS

Balloting members on the pay cap

18/10/17

Art

'Dazzling' Bad Art show points to socialist future

18/10/17

Council

Sheffield Labour council threatens peaceful protesters with prison

18/10/17

South West Wales

Hundreds turn out for rally aimed at removing west Wales Tory MP

18/10/17

NHS

Uprising to save the NHS!

18/10/17

Socialism

Can you donate to the Socialism 2017 appeal?

18/10/17

East London

No cuts - hands off King George A&E!

18/10/17

North London

North London hospital workers fight cuts and job losses

18/10/17

BAE

Nationalise to save jobs at BAE Systems

18/10/17

Schools

Schools "can't go any further" - stop the cuts: set deficit budgets now

18/10/17

Swansea

Socialist Students 'welcome' Hillary Clinton to Swansea

triangleMore Reports and campaigns articles...


Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party

triangle19 Oct Arriva North West bus drivers strike over pay

triangle18 Oct Russia, October 1917: When workers took power

triangle18 Oct Tories torn - bin them now

triangle18 Oct Royal Mail bosses block strike - back postal workers

triangle18 Oct Balloting members on the pay cap

triangle13 Oct The end of the Tories?

triangle11 Oct Nasty party imploding...drive out the Tories

More ...

triangle21 Oct Birmingham: NSSN Solidarity Forum

triangle23 Oct Chesterfield Socialist Party: The continuing struggle for abortion rights

triangle24 Oct Liverpool Socialist Party: The October Russian Revolution 100 years ago to the day

triangle25 Oct Salford Socialist Party: The October 1917 Russian revolution

More ...

Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube

Archive

Archives:

October 2017

September 2017

August 2017

July 2017

June 2017

May 2017

April 2017

March 2017

February 2017

January 2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

Legal

SP RSS feed RSS

Platform setting: = No platform choice

V2