June 20, 2005
Oil Up - Pain At The Pump
By: Rowan Wolf
Oil prices are going back up, and the Guardian says "more pain at the pumps." But is the underlying reason strong demand (Wa. Post), or Nigerian violence (BBC)? It depends on how you want to spin the story.
All three articles take the same information and present it in essentially the same way. It is the headlines that vary - consumer shock, too much demand, or the increasing violence in Nigeria. According to the BBC, the prime motivator was the "threat of Islamic terrorist" which caused the US, UK, and Germany to close their embassies. The Guardian takes essentially the same take. After all, Nigeria is the "fifth biggest source of US oil imports." The Washington Post, headline to the contrary ("Oil peaks toward $60 on strong demand"), notes in the first paragraph that the "traders (are) already worried about tight supplies."
Since many people scan headlines rather than read the articles, and it seems likely that the headline sets one up to interpret what one reads, then headlines become a political issue. If the violence in Nigeria is thought to impact the supply of oil to the US (and overall supply), is this a "demand" issue? Indirectly, yes. However, there seems to be a conspiracy about talking about short supplies of oil.
Demand does obviously play a role. The BBC article does note that the US supply of "diesel and heating oil" are running below average, while demand has increased 3%. Further, while you wouldn't guess it from the Wa. Post's headlines, the elections in Iran also seem to be of concern (since Iran is the fourth largest producer).
So demand is up, but supply is fragile - no matter how much more petroleum OPEC is willing to pump. The speculation in oil prices is being driven (if the articles are to be believed) by political situations. Underlying this however is that supply is so weak that political concerns can "upset the apple cart."
Supply - demand - resource wars. This is the peak oil scenario, but the media does not want to talk about that. It might cause a panic.
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