Economics Report - Why Oil Continues

Its Climb

By Mario Ritter

2008-5-8

This is the VOA Special

English Economics Report.

The price of oil has risen to more than

one hundred twenty dollars a barrel. Some experts say the most recent price

increase is only the beginning. Experts at the investment bank Goldman Sachs

have predicted that oil could reach two hundred dollars a barrel.

Unrest

in oil producing countries has been partly to blame. Last weekend, a rebel group

in Nigeria said it attacked an oil center in Bayelsa state. Nigeria is the

eighth biggest oil exporter in the world.

Also, Iraq is slowly rebuilding

its oil production ability. Iraq's industry minister says the country's oil

production is currently at about two million barrels of oil a day. He says that

could increase to five million barrels of oil a day in two to three years

depending on how much foreign help Iraq receives.

The Venezuelan

government's efforts to control its oil industry have increased tensions with

foreign oil producers. And Russia, the world's second largest exporter, has also

sought to increase government control of its energy resources. Nationalization

of oil resources often forces out foreign investment that would normally seek to

increase supplies.

Another cause of high oil prices is the weak American

dollar. Oil is traded in dollars, so a less valuable dollar buys less oil. But,

experts have noted that the weak dollar alone cannot explain the increase of

about eighty-five percent in the price of oil over the last year.

The

Organization of Petroleum Exporting Countries is the world's largest oil

producing group. It says its member nations, not including Iraq, are investing

one hundred twenty billion dollars in over one hundred new oil projects. OPEC

says it produces about forty-five percent of the world's oil exports.

In

the past, non-OPEC producers like Russia, Mexico and Norway have increased

production to meet demand. But these nations have struggled to keep production

at the levels of recent years. Norway's production, for example, has decreased

by twenty-five percent since two thousand one.

The expanding economies

of Asia, especially China and India, have increased pressure on world supplies.

Meeting demand appears to be harder than ever before.

And that's the VOA

Special English Economics Report, written by Mario Ritter. Transcripts and

archives are at 51voa.com. I'm Bob Doughty.

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