Global Warming Seen Effecting Oil Price Volatility

The volatility is forcing airlines and manufacturers to change strategies designed to lower fuel expenses.

Published: 13-Jan-2007

Record-breaking temperatures in the U.S. and Europe are reducing fuel demand and contributing to the biggest fluctuations in oil in more than a year. Wall Street has never been more divided on the direction of crude, adding to price swings.

Oil is down from a record $78.40 a barrel in July, when forecasters said hurricanes made stronger by climate change may tear up Gulf of Mexico production plants. Crude dropped 7.8 percent to $56.31 a barrel last week as New York City broke a 129- year record for making it this far into winter without snow. The U.K. said 2007 may be the warmest year ever.

"The bulls have been bowled over by the weather," said Adam Sieminski, the chief energy economist at Deutsche Bank AG in New York, who forecasts an average of $62 oil for 2007. He said recent mild temperatures stem from a cyclical El Nino weather pattern and to a lesser extent from global warming.


Visits to China, India, Malaysia and Pakistan are significant because the trip spells out the Saudi Kingdom's Look East policy, representing a new reorientation in its foreign policy that was heavily tilted toward the West.

The worst two scenarios suggest a drastic decline in output to 875,000 barrels a day by the end of 2007 and to just 520,000 a day by the end of 2008.

Bush said he envisioned a future in which a plug-in hybrid car could drive 40 miles on a lithium-ion battery, then stop at a filling station for ethanol, a fuel usually made from corn, similar to HyMotion Prius pictured below.


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