Oil price increases of 2004 and 2005

Oil price in 2003-2005 Average US retail price of regular unleaded gasoline Oil prices from 1860-1999 in 1999 dollars. Source: [1]

The price of standard crude oil on NYMEX was under $25/barrel in September 2003. By August 11, 2005, the price had been above $60/barrel for over a week and a half. A record price of $70.85 per barrel was reached on August 29, 2005.[2] While oil prices are considerably higher than a year ago, they are still roughly 25$ from exceeding the inflation-adjusted "peak of the 1980 shock, when prices were over $90 a barrel in today’s prices" [3].

In the United States gasoline prices reached an all time high during the first week of September 2005 in the aftermath of Hurricane Katrina. The average retail price was nearly $3.04 per gallon. The previous high was $2.38 per gallon in March 1981, which would be $3.03 per gallon after adjusted for inflation.[4][5]

Demand

High demand is led by the U.S. market, the source of an increasing percentage of the world's demand for petroleum. The U.S. economy currently accounts for one-quarter of all demand. New demand is also coming from emerging industry in third world nations, including India and especially China which is developing a western-style car culture and whose manufacturing bases have grown very rapidly in recent years.

Sources of the world-consumption-increase in 2004 compared to 2003 (total increase of 3.4%), according to U.S. Department of Energy Energy Information Administration estimates: [6]

  • China: 38.9%
  • US: 19.4%
  • Asia outside Japan and China: 13.8%
  • Canada: 4%
  • UK: 3.5%
  • combined other non-OECD: 21%

Note: the total percentage exceeds 100 because the overall demand from all other countries decreased during the same period..

Supply


There are a number of reasons why oil traders feel that oil supplies might be reduced. One of the most important is growing turbulence in the Middle East, the world's largest oil producing region. The war in Iraq, Iran's nuclear program, and questions about Saudi Arabia's internal stability all could in the future lead to a dramatic fall in the supply of oil. Outside the Middle East other oil producers have worried investors such as the strikes political problems in Venezuela and potential instability in West Africa.

In late August, 2005, Hurricane Katrina crippled the supply-flow from off-shore rigs in the Gulf Coast, the largest source of oil for the domestic U.S. market. Short-term shutdowns because of power outages knocked out two major on-shore pipelines, and at least 10% of the nation's refining capacity was not operating in the wake of the storm. Gas prices in the region, normally 70 cents below the national average, were at $3.12 on August 30.[7]

World supply (specification) came in at 83 million barrels a day during 2004 in department of energy EIA calculations ([8]). This rate of increase is faster than that of any other date in the past. Despite this there is increasing discussion of peak oil and the possibility that the future may see a reduced supply of oil. Even if oil supplies themselves are not reduced, some experts feel the easily accessible sources of light sweet crude are almost exhausted and in the future the world will depend on more expensive sources of oil.

The short term price of oil is partially controlled by the OPEC cartel and the oligopoly of major oil companies. One other important cause is the United States dollar's slump against the Euro. Since oil is traded in dollars, the price must increase for OPEC to maintain buying power in Europe.

Causes

Some people and news agencies argue that labor strikes, hurricane threats to oil platforms, fires and terrorist threats at refineries, and other general problems are responsible for the higher gas prices. Critics argue that these problems periodically push price higher, but that they are not fundamental or long term enough to cause the large jump in gas price. A more fundamental problem that some believe is causing the price to rise is the probability of peak oil already or soon to be reached. Not only is there a limited amount of fossil fuels which have been burnt as fuel, but however much remains will be used faster by a growing industrialized world population and what remains will be more dificult to get since the easiest wells have been tapped and the remaining sources will be fought over in resource wars.

Others believe that the price of oil is almost entirely speculative, and that the increase in price is due to oil speculation extending into the long term. These people argue that speculators foresee increasing demand, decreasing supply, or both, leading to a long term increase in the price of oil. If these speculators are wrong, current prices may actually be a price bubble, and the price could thus collapse. A July 14, 2005 Morgan Stanley report[9] suggests that opinions of the oil market could burst just like a bubble if indications of declining Asian demand continue.

Still others suggest that the main issue is a lack of energy efficiency in industry. These analysts believe the problem would be solved by increasing the efficiency of factories, homes and transportation and easing the demand crunch by using less energy and more renewable energy.

Spring & Summer 2005 increase

Overnight gas price hike shown at a Chicago area bp station (background). The Shell station (foreground) has not yet posted the 12 cent price hike.

After retreating for several months during the winter of 2004/2005, prices rose to new highs in March 2005. The price of light, sweet crude oil on NYMEX has been above $50/barrel since March 5, 2005. On March 16, 2005, the price surpassed the October 2004 high of $55.17 to close at $56.46. In April 2005 the price began to fall, reaching $53.32 on April 9. It then reversed course and headed to an all time high of $58.28, driven mainly by lingering concerns of a prolonged weak dollar. In June 2005 crude oil prices surged to record highs eventually breaking the psychological barrier of $60.

Saudi Arabian King Fahd's death on August 1, 2005, meant a new regime that may be less amicable to U.S. influence. During mid-August, with a string of refinery snags (fires/other deterrents to oil refining), shrinking gasoline inventories, and a growing thirst for oil by American consumers, New York Mercantile Exchange traded crude oil futures surged past the $66 mark and briefly touched $67/barrel. Over the course of three weeks leading up to August 10, crude oil prices had risen by 13%.

While the street price of gasoline usually corresponds to the price of crude oil, refinery capacity can become the governing factor, particularly during periods of high demand. In addition, there are different grades of oil and each refinery is typically configured to process a narrow range of grades. As a result, shortage of a particular grade of oil can keep street prices high, even when overall supply exceeds demand.

Winter 2006 increase

On January 17, sweet crude oil for February delivery rose by $2.38 (3.7%) to $66.30 a barrel. This was the highest increase since early October 2005. Observers believe that violence in Nigeria, and Iran's friction with the West are responsible for this price increase. Continued concerns about Iran raised the price to $68.38 on January 31.[10]

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Hurricane Katrina

Gas price hike shown at a Shell station.

Hurricane Katrina had a major impact on oil and gas prices, especially within the United States. The Gulf Coast is home to a major portion of America's refining capacity. The port of Louisiana is one of its most important inlet for oil imports, and the gulf itself is a major oil producer. Port Fourchon has also suffered long term damage. Louisiana Offshore Oil Port has not. [11]

Gas prices soared after the closing down of the major pipelines connecting the gas of the Louisiana region to the entire East Coast. In Stockbridge, Georgia, regular gas prices came to $5.87 at a BP station. Shortages were feared or experienced in several states including Tennessee [12], Alabama [13], and South Carolina. [14] Many of these were blamed on panic buying. Airports began to report shortages in aviation fuel on 2 September.[15] A shortage could lead to a decrease in food production.[16] Higher prices for heating oil and natural gas were expected as the winter heating season set in.[17]

On 5:10 p.m. EDT, on 31 August, President Bush announced the Energy Department was approving loans from the Strategic Petroleum Reserve and that EPA announced nationwide waver on fuel blends. Bush stated, "This storm has disrupted the ability to make gasoline and deliver gasoline," and "This is going to be a difficult road."[18] Many people have observed however that stores of crude oil do little to address inadequate refinery and distribution capacity.

In order to stabilize world energy supplies, the International Energy Agency offered to sell two million barrels of crude oil and other refined products from national supplies. These supplies would begin entering the US markets within two weeks of 2 September. [19] [20] The press release from the IEA states, "... the implications for the oil market are global."[21]

Effects

There is controversy regarding the potential effects of oil-price shocks. Some see these increases in the price of oil leading to a recession comparable to those that followed the 1973 and 1979 energy crises or a potentially worse situation such as a global oil crash. Most economists see this as unlikely, partly because all developed countries have high fuel taxes that decrease as oil prices increase and can be eliminated in the event of a dramatic price spike. Nevertheless, that loss of revenue would put a strain on government balance sheets. The American Strategic Petroleum Reserve could on its own supply current U.S. demand for about a month in the event of an emergency, unless it is also destroyed in the emergency. This could well be the case if a major storm were to hit the gulf, where the reserve is located. While total consumption has increased [22], the western economies are less reliant on oil than they were twenty-five years ago, due to substantial growths in productivity. In the United States, for instance, each $1000 dollars in GDP required 2.4 barrels of oil in 1973 when adjusted for inflation this number had fallen to 1.15 by 2001. But oil's historically high ratio of Energy Returned on Energy Invested continues a significant decline. Despite the rapid increase in the price of oil, neither the stock markets nor the growth of the global economy have been noticeably affected. Inflation has increased. In the United States, the Consumer Price Index rose by 0.6% compared to 0.2% for September. This was driven by a 4.2% increase in energy costs. As a result during this period the Federal Reserve has rapidly been increasing interest rates to curb inflation.

Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. For example, China and India are currently heavily investing in natural gas facilities. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas. Outside the US, more than 50% of oil is consumed for stationary, non-transportation purposes such as electricity production where it is relatively easy to substitute natural gas for oil.

The increased price of oil also makes previously impractical sources of oil attractive to businesses. The most prominent example of this are the massive reserves of the Canadian tar sands. They are a far less cost efficient source of oil than crude, but at 60 dollars a barrel, the tar have recently become very attractive to businesses. Recent months have seen billions of dollars invested in the oil sands.

The increased price of oil might also encourage greater fuel efficiency. Recent years have seen a move towards more fuel-thirsty sport utility vehicles in the United States and Canada, and this may be stopped by the high price of gas. The September 2005 sales data for all the vehicles vendor indicated SUV sales dropped while small cars sales increased compared with 2004 sales. There is also an ever increasing market for hybrid vehicles since they are more fuel efficient; since the 1973 energy crisis, the front-wheel drive passenger car has replaced rear-wheel drive as the preferred layout for energy efficient cars. There is an increasing demand of crossover sport utilities which are more fuel efficient - especially for those based on passenger car platforms.

USA Stock markets

Three-year performance of the oil industry... ...and one-month performance.

The increase in oil prices over two years was mirrored by an increase in stock values in the energy sector. The value of the stock in companies such as Apache[23] and Conoco-Phillips [24] rose sharply during this period. These prices increased more rapidly toward the end of August, particularly after Hurricane Katrina. [25]

Wal-Mart shares continued their decrease in value that began with the increase in the oil prices. Over two years, stock in Wal-Mart dropped in value by 25% from $60 per share to under $45 per share. [26] Earlier in August, Wal-Mart announced that higher than expected oil prices cut into the corporation's profits for the 2nd quarter of 2005. Since oil prices after the end of the 2nd quarter continued to rise, 3rd quarter profits from Wal-Mart are expected to be small. Because Wal-Mart's distribution system relies on the customer to drive to a large discount big-box store, increases in the price of fuel might discourage some customers from making the trip as often. Wal-Mart, like all retailers, will also face higher shipping costs to get goods from the factory to the stores. This will likely cause inflationary pressures.

Asia Pacific Region (excludes Australasia)

The Pacific rim had been experiencing this crisis on an ongoing basis prior to Hurricane Katrina.

  • In the Philippines, the oil crisis caused its public to call for immediate government assistance. [27] New sources of energy were sought to deal with the crisis.[28]
  • A senior minister of Singapore expressed concern at the oil crisis in Indonesia.[29]
  • The Indonesian president had instituted subsidies to control the price of gasoline.[30]


Sub-Saharan Africa

High oil prices are hurting many countries in Africa, including Zimbabwe, Eritrea and Tanzania. High oil prices have created an oil supply instability, per barrel price instability or both. In some cases this has led to fuel rationing being enacted.

  • Many countries in Sub-Saharan Africa lack the foreign exchange reserves (ie, Dollars) to purchase enough oil products at the ever increasingly higher prices. These nations must resort to limiting imports or rationing their existing supplies.

Latin America & Caribbean

Venezuela's president, Hugo Chávez, came under increasing scrutiny as he began selling oil at lower-than-market prices to island nations in the Caribbean. [31]

  • At the same time, Cuba has experienced electricity shortages.

Gulf States & Eurasian Arab-Islamic Regions

Iran came under increasing pressure from the European Union in regard to their program to build nuclear power plants.[32]


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Iran came under increasing pressure from the European Union in regard to their program to build nuclear power plants.[32]. Today, Cancun once more lives and remains an attractive option to local and foreign tourists from all over the world. [31]. It was estimated that Cancun will be completely ready to face the demanding vacationist wave on December 2005. Venezuela's president, Hugo Chávez, came under increasing scrutiny as he began selling oil at lower-than-market prices to island nations in the Caribbean. People from all social strata helped carry water bottles to donate money in special bank accounts that principal banks created. In some cases this has led to fuel rationing being enacted. The people's response was immediate and impresionant.

High oil prices have created an oil supply instability, per barrel price instability or both. to aid people who suffered. High oil prices are hurting many countries in Africa, including Zimbabwe, Eritrea and Tanzania. There was an exhaustive campaign by the media that featured public figures, including the President Vicente Fox, actors, musicians, etc.
. American actor Mel Gibson donated an important amount of money to help the people in distress. The Pacific rim had been experiencing this crisis on an ongoing basis prior to Hurricane Katrina. reconstruction has been possible.

This will likely cause inflationary pressures. However, thanks to the aid and support of local and state governments, the federal government, the Red Cross, and civil associations. Wal-Mart, like all retailers, will also face higher shipping costs to get goods from the factory to the stores. Many houses were devastated, and many jobs were lost. Because Wal-Mart's distribution system relies on the customer to drive to a large discount big-box store, increases in the price of fuel might discourage some customers from making the trip as often. It is estimated that after Wilma left Cancun, the local tourist industry lost over US $15 Million daily. Since oil prices after the end of the 2nd quarter continued to rise, 3rd quarter profits from Wal-Mart are expected to be small. All the Airport and Harbor Operations were cancelled between October 21 to the 25 due to the worst weather conditions.

[26] Earlier in August, Wal-Mart announced that higher than expected oil prices cut into the corporation's profits for the 2nd quarter of 2005. Thousands of local and foreign tourists were hosted in improvised refuges. Over two years, stock in Wal-Mart dropped in value by 25% from $60 per share to under $45 per share. Once the storm left the peninsula, some of the beautiful beaches of Cancun had been washed away. Wal-Mart shares continued their decrease in value that began with the increase in the oil prices. It has been estimated that 95% of the tourism infrastructure was seriously damaged. [25]. The devastation was almost total with many of the principal roadways from the Hotel Zone completely flooded and damaged.

These prices increased more rapidly toward the end of August, particularly after Hurricane Katrina. At least three deaths have been reported, numerous people have disappeared, and the insured damage is estimated at between US$5 and US$8 billion. The value of the stock in companies such as Apache[23] and Conoco-Phillips [24] rose sharply during this period. Wilma made several landfalls, with the most destructive effects felt in the Yucatán Peninsula, particularly in Cancun. The increase in oil prices over two years was mirrored by an increase in stock values in the energy sector. The hurricane began accelerating in the early morning hours of October 23, exiting the northeastern tip of the Yucatán Peninsula and entering the Gulf of Mexico as a Category 2 storm. There is an increasing demand of crossover sport utilities which are more fuel efficient - especially for those based on passenger car platforms. Some portions of the Yucatán Peninsula experienced hurricane force winds for well over 24 hours.

There is also an ever increasing market for hybrid vehicles since they are more fuel efficient; since the 1973 energy crisis, the front-wheel drive passenger car has replaced rear-wheel drive as the preferred layout for energy efficient cars. The eye slowly drifted northward, with the center passing just to the west of Cancún, Quintana Roo. The September 2005 sales data for all the vehicles vendor indicated SUV sales dropped while small cars sales increased compared with 2004 sales. Portions of the island of Cozumel experienced the calm eye of Wilma for several hours with some blue skies and sunshine visible at times. Recent years have seen a move towards more fuel-thirsty sport utility vehicles in the United States and Canada, and this may be stopped by the high price of gas. The hurricane's eye first passed over the island of Cozumel, and then made an official landfall near Playa del Carmen in the state of Quintana Roo at around midnight on October 22 EDT with winds near 140 mph. The increased price of oil might also encourage greater fuel efficiency. On October 21, Hurricane Wilma made landfall on Mexico's Yucatán Peninsula as a powerful Category 4 hurricane, with winds in excess of 150 mph.

Recent months have seen billions of dollars invested in the oil sands. At its peak, it was the most intense tropical cyclone ever recorded in the Atlantic basin and the tenth most intense globally, with the lowest atmospheric pressure ever recorded in the Western Hemisphere of 882 millibars (26.05 inHg) at sea level, exceeding the record previously held by Hurricane Gilbert that also impacted the Peninsula of Yucatán some years ago. They are a far less cost efficient source of oil than crude, but at 60 dollars a barrel, the tar have recently become very attractive to businesses. It was also the third Category 5 hurricane of the season, beating the records set by the 1960 and 1961 seasons. The most prominent example of this are the massive reserves of the Canadian tar sands. Wilma was the twenty-first named storm, twelfth hurricane, and sixth major hurricane of the record-breaking 2005 Atlantic hurricane season. The increased price of oil also makes previously impractical sources of oil attractive to businesses. Cancún is served by Cancún International Airport.

Outside the US, more than 50% of oil is consumed for stationary, non-transportation purposes such as electricity production where it is relatively easy to substitute natural gas for oil. Mayan dialects are also spoken between some workers and people born in the Yucatán peninsula. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas. The main language in Cancún is Spanish, although English is widely spoken throughout the tourist areas. For example, China and India are currently heavily investing in natural gas facilities. Here and there in the hotel zone are some ancient ruins. Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. Cancún's hotel zone also has an interactive aquarium where visitors can see the marine diversity of the area, swim with dolphins and feed sharks.

As a result during this period the Federal Reserve has rapidly been increasing interest rates to curb inflation. The temperatures are typically between 26°C and 36°C (78.8°F and 96.8°F). This was driven by a 4.2% increase in energy costs. The temperature of the city is warm, moderated by the marine breeze which circulates through its avenues. In the United States, the Consumer Price Index rose by 0.6% compared to 0.2% for September. International brands in Downtown area are Radisson Hacienda Cancún, Best Western Plaza Caribe, Oasis America. Inflation has increased. There are also many clubs for all types of people, including gay clubs like Karamba or Glow, but the hotels are more accessible to all types of travelers, including some with lower rates.

Despite the rapid increase in the price of oil, neither the stock markets nor the growth of the global economy have been noticeably affected. Downtown Cancún gives us a different aspect. But oil's historically high ratio of Energy Returned on Energy Invested continues a significant decline. The drinking age in Mexico is 18; while in the United States, it is 21. In the United States, for instance, each $1000 dollars in GDP required 2.4 barrels of oil in 1973 when adjusted for inflation this number had fallen to 1.15 by 2001. For just about all of these students, drinking alcohol is usually the reason why they come to Cancún. While total consumption has increased [22], the western economies are less reliant on oil than they were twenty-five years ago, due to substantial growths in productivity. Around March and April, Cancún experiences a flood of college students (usually from the United States) who travel to Cancún to party.

This could well be the case if a major storm were to hit the gulf, where the reserve is located. Downtown is home to less expensive places to shop like Walmart, Comercial Mexicana and Soriana, not to mention several flea markets like the one in the hotel zone. demand for about a month in the event of an emergency, unless it is also destroyed in the emergency. The hotel zone tends to be rather expensive as it is aimed at visitors and relies on the all inclusive hotels to keep them all in this area allowing prices to soar. The American Strategic Petroleum Reserve could on its own supply current U.S. The hotel zone is one of the most exclusive internationally, with upmarket restaurants, bars, and the like which have catered for quite a number of the rich and famous. Nevertheless, that loss of revenue would put a strain on government balance sheets. Four million visitors arrive each year in an average of 190 flights daily.

Most economists see this as unlikely, partly because all developed countries have high fuel taxes that decrease as oil prices increase and can be eliminated in the event of a dramatic price spike. In Cancún there are about 140 hotels with 24,000 rooms and 380 restaurants. Some see these increases in the price of oil leading to a recession comparable to those that followed the 1973 and 1979 energy crises or a potentially worse situation such as a global oil crash. He discusses this and other issues at length on his website, http://www.cafecancun.com. There is controversy regarding the potential effects of oil-price shocks. "You can see the bottom of the Caribbean off Cancún in satellite photographs," Siegel says. the implications for the oil market are global."[21]. The underground water table is beginning to show symptoms of contamination, but by the standards of most populated areas in the United States the water is still relatively clean.

[19] [20] The press release from the IEA states, ".. Although approximately 75% of the city has public sewer lines, many homes rely on septic tanks. These supplies would begin entering the US markets within two weeks of 2 September. Sewage treatment is another danger point, he says. In order to stabilize world energy supplies, the International Energy Agency offered to sell two million barrels of crude oil and other refined products from national supplies. There has obviously been environmental damage and the situation could deteriorate rapidly, he reports, but at present (February 2005) Cancún's main problem is a breakdown of garbage collection and disposal as a result of political conflicts that will hopefully be solved by a new administration elected February 6, 2005. Bush stated, "This storm has disrupted the ability to make gasoline and deliver gasoline," and "This is going to be a difficult road."[18] Many people have observed however that stores of crude oil do little to address inadequate refinery and distribution capacity. Although some environmentalists claim that Cancún is an environmental disaster, Siegel says that is not true.

EDT, on 31 August, President Bush announced the Energy Department was approving loans from the Strategic Petroleum Reserve and that EPA announced nationwide waver on fuel blends. The city Cancun and its flourishing tourism industry were heavily damaged by Hurricane Wilma, which hit the area on October 22, 2005. On 5:10 p.m. A growing number are from the rest of America and Europe. Airports began to report shortages in aviation fuel on 2 September.[15] A shortage could lead to a decrease in food production.[16] Higher prices for heating oil and natural gas were expected as the winter heating season set in.[17]. Most 'cancunenses' here are from Yucatán and other Mexican states. [14] Many of these were blamed on panic buying. The city has grown rapidly over the past thirty years to become a city of approximately 750,000 residents, covering the former island and the nearby mainland.

Shortages were feared or experienced in several states including Tennessee [12], Alabama [13], and South Carolina. Even outlets of restaurant chains such as McDonald's and Domino's Pizza are Mexican-owned. In Stockbridge, Georgia, regular gas prices came to $5.87 at a BP station. They do not usually own the hotels themselves. Gas prices soared after the closing down of the major pipelines connecting the gas of the Louisiana region to the entire East Coast. Some observers believe that the resort is foreign-owned because they are confused by the hotel operating companies, which are international companies that supply administration and marketing services. [11]. The figure is close to 100% for the mainland.

Louisiana Offshore Oil Port has not. Despite initial skepticism that forced the Mexican government to finance the first eight hotels, Cancún soon attracted investors from all over the world, but approximately 70% of the Hotel Zone properties are owned by Mexicans, many of them local residents, Siegel says. Port Fourchon has also suffered long term damage. Siegel who was the translator of Fernando Martí's "Cancun, Fantasy of Bankers," municipal authorities have struggled to provide public services for the constant influx of people, as well as to control squatters and irregular developments, which now occupy an estimated ten to fifteen percent of the mainland area on the fringes of the city, he says. The port of Louisiana is one of its most important inlet for oil imports, and the gulf itself is a major oil producer. Unfortunately, the original very sensible master plan was repeatedly modified and, on the mainland, often ignored. The Gulf Coast is home to a major portion of America's refining capacity. Development of Cancun started in 1970 and grew rapidly in the 1980s.

Hurricane Katrina had a major impact on oil and gas prices, especially within the United States. The belief that Cancun means "nido de viboras" (nest of snakes) is modern folklore, according to according to long-time resident Jules Siegel, author of the Cancun User's Guide. Continued concerns about Iran raised the price to $68.38 on January 31.[10]. It is probable that some Yucatecan or Mexican Mayanist wrote the name as Cancu'en, which was turned into Cancún by someone at the predecessor of Fonatur, the Mexican government tourism development fund that created Cancun. Observers believe that violence in Nigeria, and Iran's friction with the West are responsible for this price increase. The romanization of Mayan words varies, but it is common to use an apostrophe to indicate a kind of glottal stop. This was the highest increase since early October 2005. Cancuen refers to a snake totem, usually identified with Kukulcan or Quetzalcoatl (the Plumed Serpent).

On January 17, sweet crude oil for February delivery rose by $2.38 (3.7%) to $66.30 a barrel. There's also a site in Guatemala called Cancuen. As a result, shortage of a particular grade of oil can keep street prices high, even when overall supply exceeds demand. The earliest known reference to Cancun called it Cancuen. In addition, there are different grades of oil and each refinery is typically configured to process a narrow range of grades. In the case of a two-syllable word, you would only use an accent to indicate that the stress falls on the first syllable, as in López. While the street price of gasoline usually corresponds to the price of crude oil, refinery capacity can become the governing factor, particularly during periods of high demand. In Spanish, the accent usually falls on the second syllable.

Over the course of three weeks leading up to August 10, crude oil prices had risen by 13%. The Spanish is not really correct either. During mid-August, with a string of refinery snags (fires/other deterrents to oil refining), shrinking gasoline inventories, and a growing thirst for oil by American consumers, New York Mercantile Exchange traded crude oil futures surged past the $66 mark and briefly touched $67/barrel. This is probably a result of the fact that English-language type faces available in the early days of Cancun did not have accented characters, or the operators did not know how to access them because the keyboard codes were different from the ones they were accustomed to using. influence. Although many international publications now spell Cancun as Cancún, in the area itself it is usually Cancún in Spanish and Cancun in English. Saudi Arabian King Fahd's death on August 1, 2005, meant a new regime that may be less amicable to U.S. On the opposite side of the island from the Caribbean Sea is Nichupte Lagoon, which is used for boat and snorkelling tours of the area.

In June 2005 crude oil prices surged to record highs eventually breaking the psychological barrier of $60. A causeway was built to link Cancun to the mainland, and an international airport was built, along with what was at first a model city for workers, complete with housing, schools and medical facilities. It then reversed course and headed to an all time high of $58.28, driven mainly by lingering concerns of a prolonged weak dollar. The government of Mexico decided to develop a tourist resort on Cancun, which was originally financed by a USD $27 million loan from the Inter-American Development Bank. In April 2005 the price began to fall, reaching $53.32 on April 9. In the early 1950s Cancun was an almost unpopulated and undeveloped island just off the Caribbean Sea coast of the Yucatán peninsula, home to three caretakers of a coconut plantation and small Pre-Columbian ruins of the Maya civilization. On March 16, 2005, the price surpassed the October 2004 high of $55.17 to close at $56.46. The mainland downtown commercial section (Cancún City), connected to the island by two bridges, has broad avenues lined with whitewashed shops, restaurants, and hotels.

The price of light, sweet crude oil on NYMEX has been above $50/barrel since March 5, 2005. Cancún is divided into two parts: The narrow 23-kilometer-long (14-mile) island section (Cancún Island) is lined with modern beachfront hotels surrounded by the Bahía de Mujeres (Bay of Women), the Caribbean Sea, and the Nichupte and Bojorquez lagoons. After retreating for several months during the winter of 2004/2005, prices rose to new highs in March 2005. The beaches are almost 100 percent limestone; the porous quality of the limestone makes for cool sand even under the intense tropical sun. These analysts believe the problem would be solved by increasing the efficiency of factories, homes and transportation and easing the demand crunch by using less energy and more renewable energy. The average temperature in Cancún is 27° C (80° F) with more than 240 days of sunshine, and rain is rare, with late August through early October being the rainy season. Still others suggest that the main issue is a lack of energy efficiency in industry. .

A July 14, 2005 Morgan Stanley report[9] suggests that opinions of the oil market could burst just like a bubble if indications of declining Asian demand continue. It is the municipal seat of Benito Juárez municipality and a world renowned tourist resort. If these speculators are wrong, current prices may actually be a price bubble, and the price could thus collapse. Cancún is a coastal city in Mexico's easternmost state, Quintana Roo. These people argue that speculators foresee increasing demand, decreasing supply, or both, leading to a long term increase in the price of oil. Wichita, Kansas, United States. Others believe that the price of oil is almost entirely speculative, and that the increase in price is due to oil speculation extending into the long term. Miami, Florida, United States.

Not only is there a limited amount of fossil fuels which have been burnt as fuel, but however much remains will be used faster by a growing industrialized world population and what remains will be more dificult to get since the easiest wells have been tapped and the remaining sources will be fought over in resource wars. A more fundamental problem that some believe is causing the price to rise is the probability of peak oil already or soon to be reached. Critics argue that these problems periodically push price higher, but that they are not fundamental or long term enough to cause the large jump in gas price. Some people and news agencies argue that labor strikes, hurricane threats to oil platforms, fires and terrorist threats at refineries, and other general problems are responsible for the higher gas prices.

Since oil is traded in dollars, the price must increase for OPEC to maintain buying power in Europe. One other important cause is the United States dollar's slump against the Euro. The short term price of oil is partially controlled by the OPEC cartel and the oligopoly of major oil companies. Even if oil supplies themselves are not reduced, some experts feel the easily accessible sources of light sweet crude are almost exhausted and in the future the world will depend on more expensive sources of oil.

Despite this there is increasing discussion of peak oil and the possibility that the future may see a reduced supply of oil. This rate of increase is faster than that of any other date in the past. World supply (specification) came in at 83 million barrels a day during 2004 in department of energy EIA calculations ([8]). Gas prices in the region, normally 70 cents below the national average, were at $3.12 on August 30.[7].

Short-term shutdowns because of power outages knocked out two major on-shore pipelines, and at least 10% of the nation's refining capacity was not operating in the wake of the storm. market. In late August, 2005, Hurricane Katrina crippled the supply-flow from off-shore rigs in the Gulf Coast, the largest source of oil for the domestic U.S. Outside the Middle East other oil producers have worried investors such as the strikes political problems in Venezuela and potential instability in West Africa.

The war in Iraq, Iran's nuclear program, and questions about Saudi Arabia's internal stability all could in the future lead to a dramatic fall in the supply of oil. One of the most important is growing turbulence in the Middle East, the world's largest oil producing region.
There are a number of reasons why oil traders feel that oil supplies might be reduced. Note: the total percentage exceeds 100 because the overall demand from all other countries decreased during the same period..

Department of Energy Energy Information Administration estimates: [6]. Sources of the world-consumption-increase in 2004 compared to 2003 (total increase of 3.4%), according to U.S. New demand is also coming from emerging industry in third world nations, including India and especially China which is developing a western-style car culture and whose manufacturing bases have grown very rapidly in recent years. economy currently accounts for one-quarter of all demand.

The U.S. market, the source of an increasing percentage of the world's demand for petroleum. High demand is led by the U.S. .

The previous high was $2.38 per gallon in March 1981, which would be $3.03 per gallon after adjusted for inflation.[4][5]. The average retail price was nearly $3.04 per gallon. In the United States gasoline prices reached an all time high during the first week of September 2005 in the aftermath of Hurricane Katrina. A record price of $70.85 per barrel was reached on August 29, 2005.[2] While oil prices are considerably higher than a year ago, they are still roughly 25$ from exceeding the inflation-adjusted "peak of the 1980 shock, when prices were over $90 a barrel in today’s prices" [3].

By August 11, 2005, the price had been above $60/barrel for over a week and a half. The price of standard crude oil on NYMEX was under $25/barrel in September 2003. At the same time, Cuba has experienced electricity shortages. These nations must resort to limiting imports or rationing their existing supplies.

Many countries in Sub-Saharan Africa lack the foreign exchange reserves (ie, Dollars) to purchase enough oil products at the ever increasingly higher prices. The Indonesian president had instituted subsidies to control the price of gasoline.[30]. A senior minister of Singapore expressed concern at the oil crisis in Indonesia.[29]. [27] New sources of energy were sought to deal with the crisis.[28].

In the Philippines, the oil crisis caused its public to call for immediate government assistance. combined other non-OECD: 21%. UK: 3.5%. Canada: 4%.

Asia outside Japan and China: 13.8%. US: 19.4%. China: 38.9%.

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