Trend: High oil prices will weaken the oil-consuming countries unless political leadership and technological advances provide effective solutions.
Jim Jubak at MSN Investing describes the impact of high oil prices. Excerpts below.
Link: MSN Money - 10 stocks that win with $60 oil - Jubak's Journal.
In the long run, though, $60 oil is shorthand for a set of changes in the global economy.
- $60 oil is shorthand for an increase in the already substantial economic clout of oil-producing countries and a further decline in the independence of the global oil companies.
- It’s shorthand for rising costs of production, as oil-producing countries charge more for access to their oil and as it gets more and more expensive to produce oil from aging or unconventional fields.
- It’s shorthand for the growing importance of technology in the energy sector, as oil producers of all stripes struggle to wring oil out of old or damaged reservoirs or out of difficult-to-reach reserves -- and as every producer tries to control costs.
- It’s shorthand for increasing demand from China and India that will keep supply too close to demand for comfort. It will thus magnify every minor geopolitical ripple, such as a regional war in Nigeria, into a market-moving event.
- It’s shorthand for the increasing political uncertainty of supply, as the world becomes increasingly dependent on oil and gas from countries such as Russia, Iran, Nigeria, Venezuela and Saudi Arabia that are each ruled by regimes that are themselves dependent on oil-and-gas revenue to maintain their power.
And most of all, $60 oil is shorthand for permanently high energy prices.
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