Could oil prices increase exponentionally ?
This is the question as we are breaking record high prices. To Reuters: ” Brent oil priced in euros hit a record high on Thursday on heightened tension between Iran and the West while U.S. stocks neared peaks not seen since 2008. “
” The rise in Brent, the benchmark for European crude and most international oil trades, poses a new headache for cash-strapped Europe, still reeling from a two-year-old sovereign debt crisis.”
When I wrote the post on the increasing prices of oil, I noticed that – despite my low level in advanced mathematics – the price curve looks like the beginning of an exponential.
So I took an example of an exponential curve – in green – and pasted it next to the oil prices curve – in blue. Guess what : they are almost the same.
So unless the demand drops again – because of a massive recession, a war or any other unpleasant event – I am all too willing to bet that oil prices will keep on increasing exponentially.
To further exemplify my point of view, I would like to remind you that in the 1990s oil prices were between 10 and 20 USD, when I was writing my monography on the oil industry in mid 2006 they already were at 66 USD.
Nowadays they are gravitating at 110-120 USD, a level previously thought as potentially disruptive to our economies.
You know my opinion : the sooner we get rid of oil as a main resource of our economies, the better.
Also see : Forbes, Tired Of High Gasoline Prices Already? We Ain’t Seen Nothing Yet