The price of crude oil continues to fall, yet despite the continued falls the price of petrol in Australia remains high. On Friday the price of petrol was still $1.65 per litre. The price of oil per barrel has now fallen to $123.26 US.
It’s incredible how the oil companies are so quick to pass on the rise of oil in their petrol pricing, yet when the price of crude falls they seem to be so slow in passing on the price reduction. Maybe it’s just me or is this not a display of greed and a consequence of a lack of competition?
The price of crude is falling due to a number of factors I believe, including the slowing of the global economy, which is due to a large degree to the overwhelming price of petrol at the bowser (as well as the global credit crisis). There is also a rise in supply of fuel, largely due to the fall in demand I expect rather than any increased output by OPEC countries.
The increase in demand for oil, which led to the record price of $147.27 US a barrel on the 11th July 2008, has been led by the booming economies of China and India. These two countries alone now have a population well over 2 billion people and the oil required to fuel these two economies must be enormous. It is unlikely that the 200 000 barrels a day increase in output by OPEC to about 32.9 million barrels a day is unlikely to hold the price of oil to the current lower price for long. The price of crude can only go up as these two economies begin to pick up once again.