oil

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Rising Gas and Electricity Prices

Amidst rising gas and electricity prices the chancellor, Alistair Darling will meet with the chairman of energy regulator Ofgem, Sir John Mogg. Darling will ask whether the recent price rises are justified. At the moment, Electricity, Gas Companies and Ofgem are saying that the price rises are due to the increased cost of oil, natural gas and other energy prices. They claim with oil reaching $100 a barrel it is inevitable that domestic energy prices rise as well. Ofgem also say that the UK has one of the most competitive domestic…

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OPEC and Oil Prices in 2008

Readers Question: What will happen if OPEC continued to increase oil prices? Firstly, the rise in the price of oil is not just due to the activities of OPEC. It is partly due to the rising demand from countries such as China. If OPEC continue to contribute to higher oil prices in 2008 it would have the following effects. Oil Exporting Countries. Higher prices would lead to higher oil revenues. This would improve their current accounts and also government finances. Oil Importing Countries. Would see a deterioration in their current account deficits. Inflation. – Higher oil…

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Has Opec Misused its power?

OPEC is the organisation for Oil Producing and Exporting Countries. OPEC tries to control the price of oil within a certain target price. Because demand is inelastic OPEC can increase the profits of its member countries by keeping prices high. Therefore, if prices start to fall below the target price, OPEC may set output quota’s to restrict supply and keep prices high. OPEC did this in 1973, when the price of oil was tripled in response to events in the middle east. This caused significant economic hardship in the West, who had…