Nymex crude oil prices fall below US$74 a barrel on Monday in
profit taking after surging to a record high of more than US$75 per
barrel last Friday and gaining about US$5 last week. However, the
future oil prices and its impact on the world economic growth has
once again become a major concern to the world.
Same as in the past years, the high oil prices resulted from
several reasons such as the strong demand, the geopolitical
uncertainties and the low excess oil production capacity.
The soaring oil prices resulted mainly from strong recovery of
the world economy beginning from three years ago, leading to a
rising demand for oil and there are increasing worries on the lack
of enough oil supply in the future.
At present, the global oil demand reached about 82 million
barrels a day and will continue to increase in coming years.
Meanwhile, the supply remained at almost the same level of demand
and put the demand of supply at a fragile balance which can be
easily shattered by any bad news in the world oil market, thus
pushing the oil prices upward continuously.
Lack of enough excess oil production capacity is another big
problem facing the world oil market and is one of the main reasons
in pushing the prices higher and higher recently. The amount of
excess oil production available in the Organization of Petroleum
Exporting Countries (OPEC) is around 1 million barrels a day, only
about 1 percent of the world oil demand, according to many
analysts.
At the same time, the high oil prices have not seriously
hindered the pace of world economic growth and the economy has been
increasing strongly in the past two years and is expected to march
forward in a quick pace.
In its latest semi-annual World Economic Outlook report released
last week before the joint spring meeting of the IMF and the World
Bank, the IMF said that the growth of global gross domestic
products (GDP), after rising 5.3 percent and 4.8 percent
respectively in the past years, is estimated at 4.9 percent in
2006, 0.6 percentage point higher than projected in last IMF
meeting held in September 2005. The world economy will only ease
slightly to 4.7 percent in 2007.
In despite of the high oil prices in the past years and
foreseeable future, the US economy increased 4.2 percent in 2004
and 3.5 percent last year and is expected to increase 3.4 percent
this year and 3.3 percent in the next year.
That means the world economy has been adjusting well to the high
oil prices in the past 30 years since the two oil crises occurred
in 1970s and early 1980s. Many measures including multiplying
energy resource, increasing the energy efficiency and building the
government strategic oil reserves have helped the world economy
greatly in dealing with the impact of high oil prices.
Obviously, the impact of soaring oil prices is still a major
concern to the world economy and the IMF has listed the high and
volatile oil price as the number one of four primary concerns
facing the global economic growth in the future.
The IMF said in the World Economic Outlook report that oil
prices are being increasingly driven by concerns about future
supply, with the International Energy Agency assessing both
upstream and downstream investment to be significantly below
desirable levels.
Looking forward, the full effects of the recent shock of high
oil prices may not yet have been felt, especially if producers and
consumers are still treating it as temporary rather than largely
permanent in nature, it said.
The Group of Seven industrial countries -- also the major oil
consuming countries in the world -- are increasingly worrying about
the soaring oil prices and pledged to take more measures.
"We are strengthening the dialogue between oil producers and
consumers to further improve market transparency through the
release of more complete and timely data on production, consumption
and inventories, and for clear reporting of oil reserves," the G7
countries said last week in a statement after their financial
leaders met in Washington.
G7 countries "urge investment in exploration, production, energy
infrastructure and refinery capacity" and "remain committed to
greater energy efficiency, conservation and diversification, which
will improve the balance between supply and demand."
(Xinhua News Agency April 25, 2006)
