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.