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Fuel for thought

January 6, 2017

 Following successive increases last year, petrol and diesel prices have hit 18-month highs following an announcement by OPEC (the guys that try to regulate the petroleum based markets) that production would be cut. Brent Crude Oil prices (basically, the ones that matter) have doubled since last January and the fall in sterling means we're getting an even worse deal as everyone trades oil in $ (US Dollars).

 

Is there a silver lining? Well, sort of. In order to meet the OPEC cuts that have been laid out (basically advisory to avoid us running out any time soon), then Russia have to reduce their output. Russia, however, don't have the best track record in keeping promises to OPEC. Additionally, Russia could potentially make short term profits by exceeding these guideline reductions and make a few Rubles while prices are high. This would, eventually, drive the market back down and everyone else would follow suit.

 

So, this might be temporary or it might be permanent. No-one likes paying more for a commodity, especially when it's so out of their control, but ultimately the price of oil and petroleum based products will always increase as it is a diminishing resource.

 

Car makers are now having a bit of a scramble to introduce electric cars to the market, something that they realistically should have been doing about 10 years ago. While they're more than happy to sell people gas-guzzling cars and enjoy prosperous partnerships with oil companies, if no-one can afford to fuel the cars, then no-one will buy them.

 

We'll talk a b it more about the future of transport in a blog later this year, but for now we may all just have to grin and bear it as the cost of driving continues to increase.

 

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