Oil prices will continue to rise

We have to start thinking about living with high oil prices.

That’s the advice coming from the Caribbean Money Market Broker’s (CMMB) Chief Economist Jwala Rambarran.

The regional economist has anticipated a rise in global interest rates to 5.5 percent by the end of the December 2006, pushing oil prices to increase even more on the international market.{{more}}

According to Rambarran, oil prices continue to remain high and volatile and have doubled over the course of a year and a half.

He cautioned that the region should expect to see oil prices remaining high over the course of the next year averaging around USD$ 50-55 per barrel.

Rambarran noted that every time oil prices spike they recoil at a relatively higher price than they were before.

“It means that now we have to start thinking about living with high oil prices and focus on the strategies we are going to have to take to ensure that energy conservation comes to the fore,” Rambarran said.

The continued upward movement of prices resulted just last month in an increase in the local prices consumers pay for gasoline and diesel at the pump. This development is one that most likely will see commuters paying more for public transportation soon.

This country, along with the rest of CARICOM , is hoping to receive a consignment of petroleum products from Venezuela under the PetroCaribe initiative, which analysts say most likely will serve as a valuable response mechanism to the growing oil crisis.

Under the PetroCaribe agreement with Venezuela, energy resources will be supplied to 11 Caribbean countries at a low price and with flexible payment terms. The agreement will see petroleum prices reduced by the removal of middle traders through government-to-government arrangements.

While awaiting the full implementation of the PetroCaribe initiative, upward moving global prices have fuelled some controversy locally between the Government and international oil company Chevron Texaco over the price of Liquified Petroleum Gas (LPG).

The US-based energy company is threatening to withdraw its LPG supply from the local market if they are not granted a price increase, a demand which this country’s Prime Minister has labeled as lacking any justification and not in comparison with the international benchmark price of sale for LPG.

With OPEC officials having warned that oil prices could top USD$80 per barrel during the next two years, prices jumped even higher on Monday after fresh unrest in Nigeria slashed output, pushing oil prices up to USD $61 per barrel.

Though Nigeria is the biggest producer of crude in Africa, analysts are keeping a closer watch on events in Moscow, where Iranian and Russian officials on Monday ended talks without agreement on a Russian plan to resolve Iran’s nuclear standoff.