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Friday, February 25, 2011

Starting to Join the Dots .... finally

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Suddenly the world's media is awash with concern that the recent rise in oil prices will stall economic growth worldwide and cause another global recession. Guardian and here  BBC  Wall Street Journal

Finally, even in New Zealand, Brian Fallow economic commentator for the New Zealand Herald expresses concern about the implications for the New Zealand economy from rapidly rising oil prices.

It has taken the uprising in Libya to finally focus the mind of commentators on the dire effects on the world economy of oil prices. But most of this analysis fails to acknowledge that prices were already rising rapidly well before the uprising is in the Middle East due to accelerating demand in developing nations, as well as in oil producing countries. And that the Libyan crisis and the speculation that has followed is a “fear premium” on the price -- which was already rapidly rising due to fundamentals of supply and demand.

As I pointed out a few days ago, none of this is news to people like Jeff Rubin and other more astute energy savvy economists who have been warning for over two years that once the global economy improves, increased demand will force up prices into triple digit territory.

Despite warnings from a New Zealand Parliamentary report, Lloyd's Of London, the International Energy Agency, the US military and a host of other credible groups, our mainstream media has failed to report this looming crisis.

Likewise our politicians avoid this issue like the plague, and no risk management planning has been done. We are no better prepared than we were in 2008 when prices last spiked. They need to be held to account. In an election year hard questions need to be asked as to why these clear and urgent warnings have been ignored and not shared with the public, and what policies the main parties have to urgently lower our oil dependency, and to plan for an imminent oil-induced recession.


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