Global Talking Point Oil

Tuesday, September 06, 2005

Surfing countless news sources leaves the impression that the whole world focuses on a single issue these days. Hurricane Katrina and its disastrous aftermath have been pushed to the #2 slot, trailing the talk about oil with quite some distance. With more photos from queues forming at gas stations in several countries the rest of the world gets wary too.
Drivers in Belgium pay about $7 for a gallon of the commuter's dearest fluid, gas prices rose close to 10 percent in a day last week in Germany and consumer's ways to cope show that the European Union is a far way off from a true union.
German TV station RTL aired a report showing German motorists flocking to Dutch gas stations to take advantage of a 10 Euro-cent lower price for diesel, which currently sells for 1,07 Euros. Heading back to Germany these drivers run into roadblocks set up by German customs. German customs rules only permit the importation of a full tank plus a 20-litre spare canister. Droves of drivers were shown getting caught with multiples of this amount, getting fined 47 Euro-cents for every litre over the limit. How was that about the EU being a customs union?
The report also shows that rising fuel prices are a major - if not very logic - concern to consumers. Smuggling 80 litres of diesel results in savings of 8 Euros. Counting in additional mileage, wear, insurance and depreciation the "cheaper" diesel appears quite costly.
The initially generous offer from the EU to ship refined oil products to the USA in order to smoothe supply disruptions in the wake of hurricane Katrina could soon turn into a domestic political backleash. European consumers won't be very understanding when they get the feeling that their vital supllies are being shipped off to a nation where gas prices are still significantly lower than in Europe.
Until now the oil wars have been limited to Iraq. Now they spread to the roads of the world, I fear.
Reports from the US that full refining capacity will only be restored in the coming months have led to small declines in crude oil prices today as markets see more problems at the level of refined oil products. I stay with my forecast that crude oil's correction to $63 per barrel some days ago will be seen as the low for quite a while. See oil hitting new records soon. Consumers can reduce their fun rides but there is no way to cut down on commuting.
UPDATE: Jeff Matthews has a griping comparison about water and oil prices.


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