Unpredictable Oil Prices are Hurting Everyone

By Chris de Morsella on February 22, 2011 2 Comments alternative energy, Aramco, biofuel, Brent spot price, capital allocation, capital requirements, crude oil spot price, discretionary income, economic recession, energy sector, energy speculation, financial crisis, Geothermal, global economy, inelastic commodity, long term capital investment, oil, oil & gas exploration, oil spot price, OPEC Reference Basket, peak oil, price forecasting, price stabilization, price volatility, production plateau, reserve production capacity, Sadad al-Husseini, Saudi Arabia, solar;, strategic petroleum reserve, swing producer, West Texas Intermediate, WikiLeaks, wind, WTI

The recent swings in the spot price for crude oil — especially in light of the currently rapid rising spot prices are cause for alarm. Noting that the current run up of prices looks a lot like period leading up to the sudden price spike that occurred in the summer of 2008. It goes on to argues that the global economy needs a better market regulating mechanism that can help manage these swings and reduce their amplitude so they become less damaging to the world’s economies. The energy business — whether it is alternative energy or oil, gas or coal exploration and development — has huge up front capital needs. This needed capital is much harder to raise in a climate of such extreme near term price uncertainty.