Tuesday, September 19, 2006

High Oil/ commodity prices a boon for China and India

After the Industrial Revolution in Europe, the imperialist powers viz. England, Spain, Dutch, Portugal, France and Japan made use of other countries as sources of raw materials and cheap labor, shaping their economies to suit their own interests, and keeping their people in poverty. For years imperialist nations of the world enjoyed cheap natural resources/labour at cost of human slavery. Vastness of the earth was limited to few...

After the second world war Imperialism started to crumble and most of the nations soon broke free from the shackles of colonialism. But that was not to be...

The United States was now the world's dominant economic and military power. They mastered the art of puppet sovereignties to have the goodies flowing to the world's biggest consumer at nominal cost. But the lion saw a competent reflection in the Soviet Union and felt uneasy.

Once the Union spilled over in puddles, the oil guzzler had it bottoms up. Crude prices tumbled to the whims and fancy of the master till 1999.

Dawn of the 21st century saw the sun rising from the east. Information technology opened up the window to oneness for all to peep and sneak. The best thing about money/market is that it is heartless and follows simple principles of economics (though the markets do get sentimental over futures). Businesses in search of cheaper finished products and services, found a heaven in two countries rich in human resources and heritage - One for the goods sector and the other for services. At the same time, 9/11 pulled an iron curtain over ME and US relationship. During "I go west you go east" malee, oil prices took the northway. Other commodities also followed the same way. Raw material supplier countries, which were languishing in a dark era, saw the light of the day and overnight turned into bustling consumer markets for the finished products and servises, thus opening more channels for China and India.

High oil/commodity prices is not a cause of concern for these two countries as they will always be adding value to it and will also find buyers in long suppressed markets. Real heat will come on those riding iron horses through endless tarpets (roads) in their quest to kill time and those churning out tonns of garbage each day to satisfy their unending desires...
7th Sept., 2006
El Nino depresses oil/ tanker market outlook

NOAA predicts a mild to moderate El Nino setting in late this year. The condition will sustain over a period of 9-10 months.Wots El Nino?
Normally the cold currents from poles push the hot equatorial waters to west in pacific sea. But periodically, in absence of strong winds the currents get into reverse gear, giving rise to a hot and wet season on the American continents pacific coast.
1. Warmer than usual winter season in the USA. - lowers demand
2. Weaker Hurricane season in the US Gulf. - ensures un-interrupted supply.
Above factors will work both ends to bring down the oil prices. Also the recent claim by Chevron to hit oil in the US Gulf soften the oil futures.
Today the tanker market is over supplied, which in fact is the call of future as demand for oil grows in leaps and bound. Thus the driving factor for the tanker market is going to be the oil prices presently. In case oil market slumps, tankers gestating speculators dream will have to abort storage operation and get back to trading. These extra units once pressed into already over supplied market will add to the owner's misery.
Now it is upto Capt. Bush, Chavez and Ahmadinejad to keep the flag up with their rhetorics or actions...


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