Fuelling the uncertainty

BP's chief executive Lord Browne is entitled to feel a bit puzzled about the current rise in oil prices and the consequent high price of petrol at the pumps. The prevailing explanation for high prices in 2004, the dramatic increase in Chinese demand for oil, is hard to square with China's much lower increases in demand last year and this. But if increased demand is not the immediate cause of the current price spike, then it is hard to say that lack of supply is at its root either, since there is spare production capacity in many oil-exporting nations and some reserves are currently rising not falling.

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