Fuel Pricing
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Forecasted prices
Fatih Birol, chief economist of the International Energy Agency expressed his opinion in October, 2007 that oil prices will remain high for the foreseeable future due to rapid increases in demand from the huge developing economies of India and China.[35] According to informed observers, OPEC, meeting in early December, 2007, seemed to desire a high but stable price that would deliver substantial needed income to the oil producing states, but avoid prices so high that they would negatively impact the economies of the oil consuming nations. A range of 70-80 dollars a barrel was suggested by some analysts to be OPEC's goal.[36] Some analysts point out that major oil exporting countries are rapidly developing, and because they are using more oil domestically less oil may be available on the international market. This effect, outlined in the export land economic model, could significantly reduce the oil available for trade and cause prices to continue to rise. Particularly significant are Indonesia (which is now a net importer of oil), Mexico and Iran (where demand is projected to exceed production in about 5 years), and Russia (whose domestic petroleum demand is growing rapidly).
Effects
The effect the rise in price of oil has on a market is not directly proportional to the cost of crude oil. For example, United States drivers have have not seen the price of gasoline rise by 400% in the over the past 5 years (as oil has) because costs such as refining, transportation and taxes are also part of the price of auto fuel, as well as the sales profits of distributors. There is debate over the long term effect the current ellevation of oil prices will have. Some speculate that an oil-price spike could create a recession comparable to those that followed the 1973 and 1979 energy crises or a potentially worse situation such as a global oil crash.
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