The price of oil has hit an all-time high in London, rising above $146
a barrel, with New York crude prices not far behind. Tendai Maphosa
reports for VOA from London analysts do not see an end to the price
increases anytime soon.
The prices of crude have reached record levels, but the bad news, analysts say, is they have not peaked yet.
John Mitchell, an energy analyst at the London research center Chatham House, tells VOA prices will keep rising unless there is a sharp drop in demand.
"This has been building up quite slowly, but now it is very serious and therefore people are responding to it. It takes time for that response to take effect but people are already ... you have seen car sales in the United States go down very drastically and the switch from big cars to small cars that will take an effect over the next year or two, so I would certainly be very surprised if we saw prices anything like this high in one year or two years time," he said.
U.S. Treasury Secretary Henry Paulson, who is visiting London, also says there are no quick fixes and prices would keep rising. He met with British Chancellor of the Exchequer Alistair Darling to discuss oil prices and other economic issues.
Darling said there is a need for a global response. "The problems that our economies face today are very much international in nature. Whether it is the credit crunch which is now affecting every country in the world or the huge threat posed by very high oil prices and the inflationary effect that can have or rising food prices. These are international problems that will need countries to work together and the United States and the United Kingdom share a common interest and we have a shared commitment."
Mitchell says while high prices are causing difficulties in rich countries, they wreak havoc in the developing nations. "I think we will see it in the developing countries because there the price shock is much more severe where they have been protected by subsidies from the price so far but governments cannot continue to subsidize at these prices so there is real problems there and it is difficult for them to switch or to economize transport the basic need and I think we will see trouble, riots, protests, great political difficulties for the importing countries."
The plain facts of supply and demand are widely blamed for the rising prices. But, some reports are also blaming market speculators for driving prices higher, as well growing tension in the Middle East, especially the continuing speculation that Israel might attack Iran's nuclear facilities.