Lack of investment to blame

BP chief Tony Hayward says lack of investment to blame for oil spike

Excerpt:

"Producers are being hampered by 25 years of low investments, because of low prices," Mr Hayward told the Asia Oil and Gas Conference in Kuala Lumpur today. "The result is a supply chain being stretched to breaking point."

Comment: & speculation & The Fed's strategy

Excerpt:

Zhang dismissed the idea that rising demands in industrializing countries such as China and India should be blamed for the surge of oil prices.

"This is an incomprehensive idea since decisive factors for oil prices have run further beyond the concept of supply and demand," Zhang said in his speech at the energy ministers meeting between India, China, the United States, Japan and South Korea.

Zhang noted that from 2003 to 2006, world oil consumption posed annual increases of 1.9 percent, 3.8 percent, 1.2 percent and 0.7 percent respectively. "The rates were all in normal range."

He suggested that his counterparts put the rising oil prices into the context of global financial market, which could be affected by a wide range of factors such as the change of exchange rates, geopolitics, political instabilities and natural disasters.

"All these may turn to be reasons for speculation, ...and from this way of thinking, an answer to the current record high oil price could be found," Zhang said.

Excerpt (view article for chart):

The Fed's strategy has triggered a dollar rout and commodity boom that has sent food and energy prices soaring. The nearby chart shows how oil prices have risen as interest rates have fallen. This commodity spike has made a recession more likely, not less. The trend is ominous enough that early last week Fed Chairman Ben Bernanke finally dropped his not-so-benign neglect and talked up the dollar; oil prices fell.