Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: lurqer who wrote (39420)	3/14/2004 1:48:43 PM
From: Mannie	Read Replies (2) \| Respond to of 89467

Senate oil move highlights US price fears By Kevin Morrison in London Published: March 14 2004 18:17 \| Last Updated: March 14 2004 18:17 The growing concern about the effect of high oil prices on the US economy was underlined by the US senate's decision last week to stop further purchases by the Bush administration for the country's strategic petroleum reserve. Michael Lewis, head of commodities research at Deutsche Bank, said the US was more sensitive to higher oil prices than other large economies because of the fall in the dollar's value. Oil prices in euro and yen terms had not risen as sharply and therefore posed a smaller threat to economic growth. "US consumers have had a $50bn increase in their tax bill since last May through higher oil prices, but instead of paying their taxes to the US government, they are paying more to Saudi Arabia for the same amount of oil," said Mr Lewis. The US government has bought more than 48m barrels in the past year. This was cited as one of the factors behind the 40 per cent rise in oil prices since the lows that followed last year's war in Iraq. US crude futures closed on Friday at $36.19 a barrel. The benchmark crude price is on track to record its highest quarterly average since trading began in 1983. It is also higher, in current prices, than in the run-up to the first Gulf war, which was followed by a recession partly triggered by the oil price spike. Few economists have scaled back their forecasts of US economic growth, which are mainly above the 4.5 per cent level for this year compared with more than 3 per cent last year. But the costs of higher oil prices are mounting. US imports of crude and oil products, including gasoline, rose 12 per cent to $11.41bn in January - a quarter of the record monthly trade deficit for the US and equivalent to an annualised $136bn. Higher energy costs also pushed US consumer prices up in January by their fastest pace in nearly a year. US car owners last week were paying an average of almost $1.74 a gallon for fuel - in current prices, the highest retail price for this time of year since records began and the third highest for any time of year, according to the US energy department. US airlines and the trucking industry have complained to the US government that purchases for the special petroleum reserve have caused higher prices for jet fuel and diesel, increased costs and put pressure on profitability. Even so, Daragh Maher, an economist at ING Financial Markets, said the latest rise in oil prices differed from previous ones in being driven by demand rather than a shortage of supply. "The price rise is seen as temporary as it is largely seen to be speculatively driven, and so prices are expected to fall at some point," said Mr Maher. China, the world's second largest oil consumer, has also shown resilience against high oil prices and has so far suffered little impact on its growth. Analysts had forecast that Chinese oil demand would slow this year because its currency, the renminbi, is pegged to the dollar. Last week, however, the International Energy Agency, the energy watchdog of OECD countries, raised its forecasts for Chinese oil demand, which is now expected to increase at a faster pace than last year. news.ft.com