Is falling Oil Prices a Mirage??

The war between the human beings and the scarce energy or natural resources on this earth is a continuous process and it has been going on since the first ever civilization process. We have always learnt that the energy resources we have under our surface is an unrenewable resource; unlike water which is renewable; and that such resources will end up one day. Many countries have started their campaigns of executing renewable resources for their purpose but because the installation and maintenance costs are very high, switching from unrenewable to renewable has not yet been possible for many. It won’t be a new thing when I say stronger dominates the strong, strong dominates the weak and the weak dominates the weaker. Likewise, the powerful nations in the current world have been dominating the oil-rich nations, using them up and preserving their resources for the long run. Middle East and the Gulf countries may consider themselves both lucky and unlucky on these regards: lucky because they are very rich with oil mines and unlucky because they could not hide it from the economic and political powers of the world.

With this background, coming to the current scenario, oil prices are seen coming down the major reason being a government report in the USA showing the US gasoline inventories the highest in 11 years. The demand for the motor fuel also came down continuously for the third week as the refineries have been running at the highest rate since the month of August. There were talks going on between the President Barack Obama and the Republican Party to resolve the fiscal cliff in the country but the result was very disappointing. The disagreement between the two parties to deter more than $600 billion in the automatic tax increases and the spending cuts; termed fiscal cliff; also played a significant role in the sudden decline of the oil prices in the market. On one hand, there is a lot of uncertainty in the market due to the persistent fiscal cliff in the market and on the other hand, the inventory report made public by the government is very discouraging for the investors. The falling turmoil is not only in the case of United States of America but also in the exchanges in Tokyo and Europe.

 
The statistical figures show that the supplies of the distillate fuels have climbed to 3.03 million barrels. In the previous years, almost for six years, inventories had dropped but this time the stocks have rather piled up and discouraged the oil prices. There are threatens of the contraction in the US economy by almost a 0.5 percent if correct and sustainable measures are not taken for the economic recovery.