In these credit-crunched times, one industry is still booming: oil. Yesterday Shell and BP revealed that they had racked up £7bn in profits in the past three months alone. Later this week it will be the turn of US giants ExxonMobil and Chevron to come up with similarly eye-popping hauls.
For many commentators, such big numbers are like hammers to knees; their automatic response is to allege that big oil must, simply must, be ripping off motorists. And where is the evidence of this profiteering? A perusal of yesterday's papers showed that it came down to a forecourt in Tonbridge that had been a bit hasty in jacking up prices and, er, that's it. There may be the odd instance of sharp practice, but the main reason we're paying more for our petrol is because oil prices are going up. Indeed, they've doubled in the past year alone, so that a barrel of crude will now set you back $120 (£60).Few think it will stop there; according to Chakib Khelil, head of the oil producers' cartel OPEC, crude will hit $200 a barrel before the year is out.
Why is oil so expensive? "When crude shoots up in price, it's usually down to two things: a war or some kind of political shock; or a big shortage," says Stephen Glaister, transport expert at Imperial College London. "This time, there's been neither."
What's happened is that the two Asian giants, India and China, want more oil to fuel their growing economies. In 2006, America consumed less oil than it had done the year before; China consumed nearly 7% more. As Beijing gears up for the Olympics and India goes into another year of record growth, both will almost certainly buy more oil. Supply is not the problem; demand is.
All this will make for a long, irate summer for motorists who could soon be paying £1.50 a litre. But remember: it's not the fault of the people who run the forecourts. "The stations have a tiny mark-up - 1-2% - on petrol," says Sheila Rainger, of the RAC Foundation. "They probably make more from selling microwave pasties."
For many commentators, such big numbers are like hammers to knees; their automatic response is to allege that big oil must, simply must, be ripping off motorists. And where is the evidence of this profiteering? A perusal of yesterday's papers showed that it came down to a forecourt in Tonbridge that had been a bit hasty in jacking up prices and, er, that's it. There may be the odd instance of sharp practice, but the main reason we're paying more for our petrol is because oil prices are going up. Indeed, they've doubled in the past year alone, so that a barrel of crude will now set you back $120 (£60).Few think it will stop there; according to Chakib Khelil, head of the oil producers' cartel OPEC, crude will hit $200 a barrel before the year is out.
Why is oil so expensive? "When crude shoots up in price, it's usually down to two things: a war or some kind of political shock; or a big shortage," says Stephen Glaister, transport expert at Imperial College London. "This time, there's been neither."
What's happened is that the two Asian giants, India and China, want more oil to fuel their growing economies. In 2006, America consumed less oil than it had done the year before; China consumed nearly 7% more. As Beijing gears up for the Olympics and India goes into another year of record growth, both will almost certainly buy more oil. Supply is not the problem; demand is.All this will make for a long, irate summer for motorists who could soon be paying £1.50 a litre. But remember: it's not the fault of the people who run the forecourts. "The stations have a tiny mark-up - 1-2% - on petrol," says Sheila Rainger, of the RAC Foundation. "They probably make more from selling microwave pasties."
Source: The Guardian|by Aditya Chakrabortty
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