You’ve got to feel sorry for some of the world’s most influential politicians and business leaders.  They fly half way around the world on a mission to save the world from record oil prices – and then find that the net result of their efforts is a surge in prices, despite a commitment from Saudi oil producers to pump another 200,000 barrels of oil per day into the market.

 

Usually the whipping boys when it comes to oil consumption issues, the Americans are absolving themselves of blame. They’re abandoning their SUVs faster than you can say ‘peak oil theory’ and, we’re told, the US economy is in freefall – unemployment, household foreclosures, ‘gas’ at $4 per gallon at the pumps… it’s not surprising the latest US Government figures show that stocks are building up.  The latest Energy Information Administration’s report shows supplies rose by 800,000 barrels in the week ending 20 June.

 

 

On that basis you’d expect there would be plenty of spare oil in the market and prices should be closer to the $60 per barrel figure quoted by OPEC, than the current $130 market price.

 

But then we’re told the cause of record high oil prices (and as a result other energy commodities) is the familiar double act of supply and demand.  We’re consuming more oil than the exploration and refining industries can provide.  This is, we’re reliably informed, driven by either explosive industrialisation and Government subsidies in China and India.  Either that or its speculators that, used to make their six figure bonuses trading currency, are trading oil.  After all, the dollar is not worth the paper it’s written on any more, is it? – at least not until November.

 

Other commentators cite Geo-political tensions in Nigeria and the Middle East for shortages in supply.  But then others talk about US companies controlling most of the oil resources in Iraq.

 

Confused?  The energy supply companies hope so! 

 

All we know is that businesses face some of the largest energy bill increases of all – upwards of 100% year-on-year if our calculations are correct.  What’s important is businesses understand how, despite unprecedented energy market volatility, energy can still be one of the top three controllable costs. 

 

The million-dollar question is ‘how?’!!