Home / Asia / Oil Prices Are Up Because of Asia: No Relief in Sight
Print Friendly and PDF

Oil Prices Are Up Because of Asia: No Relief in Sight

Written by Gary North on March 6, 2012

Oil prices are up. Gasoline prices are up. Don’t blame Obama. Blame Asia.

Asia now accounts for at least 30% of world demand for oil. This is going to increase.

Now this rising demand is forcing Westerners to dig deeper into their wallets.

As Asia gets richer, Asians buy more cars. They build more factories. This requires oil.

The West is looking for substitutes: coal, natural gas, and nuclear. But the capital requirements are huge. The delay is years. But oil reacts sharply to any increase in demand. There are no reserves.

One thing can push oil’s price down: a recession.

“Just as the threat of a financial crisis has receded, the steep rise in oil prices in the first two months of 2012 has resurfaced as the greatest perceived threat to the outlook,” warned Nomura’s chief economic advisor, David Resler, in a note to clients.

Oil matters to Asia. The region is now the largest consumer of the commodity having surpassed North America in 2007 to account for more than 31 percent of world demand. Asia is home to four of the world’s 10 largest oil-consuming countries in China, Japan, India and South Korea.

Add to this the threat of war in Iran.

Back in January, the International Monetary Fund warned that a total shutdown of Iranian exports could trigger a price spike of as much as 30 percent.

That would mean oil soaring to around $160 per barrel, higher than the 2008 peak blamed for weakening the global economy just before Lehman Brothers’ bankruptcy sent it into a tailspin.

It is also particularly tricky for Asia in that China, India, Japan and South Korea are the four largest importers of Iranian oil.

If Asia booms, oil soars. If Asia goes into recession, oil falls, but so does the West’s economy.

We are now trapped in a cycle between boom and bust. Rising oil prices can undermine any recovery.

Continue Reading on www.reuters.com

Print Friendly and PDF

Posting Policy:
We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse. Read more.

5 thoughts on “Oil Prices Are Up Because of Asia: No Relief in Sight

  1. Huapakechi says:

    Could somebody closer to Washington please smack the politicians and bureaucrats until they wake up to economic reality? We are sitting on lakes of oil, mountains of coal, and gas that's almost too plentiful to meter. By exploiting our own resources, the money would be coming INTO our nation rather than to the opec cabal. Iran could be sealed off and ignored until they eliminate their fanatics and Venezuela could sit on their sludge and hope for buyers. Instead our political leadership has kept us dependent on foreign sources, strangling our economy and making our enemies rich.

  2. 19sean64 says:

    No one mentions the increase in money supply over the past three years….not only a demand increase in petroleum but a weaker dollar adds into the equation.

  3. Mike Knight says:

    Barry is responsible because he, and his globalist cronies make sure we don't reap the full rewards of US oil, shale oil, and coal reserves.

  4. First: If this prez had allowed the pipeline project to go forward you would have seen the prices go down because the speculators wouldn’t have all doom and gloom to base their speculations on.
    Second: What I listened to yesterday brings a whole new light on the problems. Those in the mideast who control the money are putting their high profits back into our stockmarket which inflates the market. By doing this the market will be falsely propped up for now but when they decide to pull all their investments it will collapse the market and this country will go into turmoil. It is the economice collapse that is needed to take us down.

    Also of interest: This admin shut down the one of the plants for Pfizer Drug Company last November and isn’t allowing them to open for a year. By doing this they are purposely causing a drug shortage and chaos in this country. People are being sent home from hospitals to die with cancer because there is no more tomoxin for the chemo treatments. There have been 4 people that I am aware of and one is only 55 yrs old.

  5. What is it about Americans that we must wait for something to bite us on the ass before we decide to take action? Just like we did in the 70s, remember when gas shot up over 60 cents a gallon, we are in a panic, looking for a solution. And just like in the eighties once wages catch up with inflation and $5.00 per gallon looses its shock value, peeople will go back to business as usual.

    As much as all good conservatives hate Obama, I have to admit that his all of the above aproach to energy development is the right path to take. We need to develop domestic oil, but we should not reject experimentation and innovation, we need to diversify our energy sources as much as possible.