No hiding place from rocketing oil prices
[2008-5-26]
Tag: PVC Gypsum Board
ANYONE who has ever watched Dallas, the epic shoulder-padded soap opera, will remember how oil money tore a wealthy Texan family apart.
The main character in the series, JR Ewing, pulled every stunt he could think of to keep control of his family business, Ewing Oil, including the sale of worthless Asian oil leases to the family banker.
Dallas may have been off the airwaves for about 17 years now, but with the price of oil rising above $135 a barrel last Thursday -- double its price this time last year -- businesses and households alike are experiencing their own oil-fuelled dramas.
Air France-KLM warned last week that its operating profit could fall by a third this year because of the surge in fuel prices. And shares in Silverjet, the British business-class airline, were suspended this weekend after the airline failed to secure some necessary funding. Like most airlines, Silverjet is grappling with rising fuel prices.
So too are Irish consumers. A year ago, the average price of petrol at the pump was €1.16 a litre, while diesel cost €1.08. Petrol prices are now moving towards an average of €1.30 a litre and some petrol stations are already charging almost €1.40. The average price of diesel is now almost €1.40 a litre -- about a third more than it was last May. And there could be worse to come.
Earlier this month, the investment bank, Goldman Sachs, warned that oil prices could hit as much as $200 a barrel over the next six months to two years.
Although some are dubious that oil prices could ever soar so high, in February 2000, when oil prices hit $30 a barrel, would anyone have believed they could climb as high as today's $135?
"Anything is possible," said Ryanair boss Michael O'Leary, when asked if oil could soar to $200 a barrel. "But do I think it's sustainable? No. No-one
'Whatever the forces driving oil prices up, $150 per barrel looks PVC Gypsum Board more likely than $100 over the next few months'
believes oil prices will stay at about $130 a barrel. Long-term investment decisions are being made at $70 a barrel. But the price won't drop to that level this week."
The truth be told though -- no-one knows what's coming next. Most of us are hoping that the latest surge in oil prices is a short-term spike.
While this could be true, so too could a scenario where oil prices continue to rise for the next two or three years, eventually hitting that D-Day of $200 a barrel. So what kind of carnage could we expect on the forecourts if oil prices hit that level?
Drivers would pay €2.04 a litre for petrol and €2.10 a litre for diesel if oil hit the $200 a barrel mark, according to Pat McArdle, chief economist with Ulster Bank.
"Much would depend on what happened to the dollar -- some recent oil price rises have been associated with a weakening dollar," said McArdle. "A rise to this level would probably trigger a major slowdown and so might not last long as demand would fall off and oil prices would then weaken."
ANYONE who has ever watched Dallas, the epic shoulder-padded soap opera, will remember how oil money tore a wealthy Texan family apart.
The main character in the series, JR Ewing, pulled every stunt he could think of to keep control of his family business, Ewing Oil, including the sale of worthless Asian oil leases to the family banker.
Dallas may have been off the airwaves for about 17 years now, but with the price of oil rising above $135 a barrel last Thursday -- double its price this time last year -- businesses and households alike are experiencing their own oil-fuelled dramas.
Air France-KLM warned last week that its operating profit could fall by a third this year because of the surge in fuel prices. And shares in Silverjet, the British business-class airline, were suspended this weekend after the airline failed to secure some necessary funding. Like most airlines, Silverjet is grappling with rising fuel prices.
So too are Irish consumers. A year ago, the average price of petrol at the pump was €1.16 a litre, while diesel cost €1.08. Petrol prices are now moving towards an average of €1.30 a litre and some petrol stations are already charging almost €1.40. The average price of diesel is now almost €1.40 a litre -- about a third more than it was last May. And there could be worse to come.
Earlier this month, the investment bank, Goldman Sachs, warned that oil prices could hit as much as $200 a barrel over the next six months to two years.
Although some are dubious that oil prices could ever soar so high, in February 2000, when oil prices hit $30 a barrel, would anyone have believed they could climb as high as today's $135?
"Anything is possible," said Ryanair boss Michael O'Leary, when asked if oil could soar to $200 a barrel. "But do I think it's sustainable? No. No-one
'Whatever the forces driving oil prices up, $150 per barrel looks PVC Gypsum Board more likely than $100 over the next few months'
believes oil prices will stay at about $130 a barrel. Long-term investment decisions are being made at $70 a barrel. But the price won't drop to that level this week."
The truth be told though -- no-one knows what's coming next. Most of us are hoping that the latest surge in oil prices is a short-term spike.
While this could be true, so too could a scenario where oil prices continue to rise for the next two or three years, eventually hitting that D-Day of $200 a barrel. So what kind of carnage could we expect on the forecourts if oil prices hit that level?
Drivers would pay €2.04 a litre for petrol and €2.10 a litre for diesel if oil hit the $200 a barrel mark, according to Pat McArdle, chief economist with Ulster Bank.
"Much would depend on what happened to the dollar -- some recent oil price rises have been associated with a weakening dollar," said McArdle. "A rise to this level would probably trigger a major slowdown and so might not last long as demand would fall off and oil prices would then weaken."
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