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Oil hits record near $147 as supply fears intensify



July 12, 2008 – Comments (0) 

Oil hits record near $147 as supply fears intensify

Friday July 11, 9:27 am ET
By Santosh Menon

LONDON (Reuters) - Oil leapt $5 to a new record high near $147 a barrel on Friday, spurred by growing worries of threats to supplies from Iran and Nigeria and the possibility of a strike by Brazilian oil workers next week.

U.S. crude was $4.85 at $146.50 a barrel by 9:15 a.m. EDT, off highs of $146.90, taking gains in just two sessions to over $10. It rose $5.60 or 4 percent a barrel on Thursday in a late burst of buying activity.

Mainly speculation at this point (as usual), but more potential conflict in Iran is a scary thought when relating to oil. Although, if oil prices do continue to rise I think it only increases the chances of the U.S. coming up with the brilliant idea of drilling for its own oil. Of course, in an election year who knows what will be promised and what will actually get done (next to nothing). People who complain about oil speculators need to realize that it is largely because of where the U.S. gets its oil from. How could you not be a little shaky when the U.S. relies on OPEC and Venezuela? We get oil from the most unreliable, state-owned oil companies, so it's a pretty darn good environment for speculation. If drilling in the U.S. began, I believe both oil prices and speculation would drop a good amount in the medium-term. Long-term, a free market in energy is what the U.S. needs. This game of pick and choose is turning disastrous and it has only forced prices (as well as speculation) higher.

People often seem to blame the side effect of something rather than looking at the cause. Whether its inflation, speculation in the markets, or whatever, the root causes never seem to be noticed or discussed. But then again, all these side effects present great places for more regulation. It's completely bogus when people blame speculators for higher prices: why are they speculating? It's not enough to know just the problem, you must know the cause of the problem to understand it and deal with it. A flawed, unreliable, pick and choose energy policy makes speculation a tempting game.

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