Can Crude Oil Reach $200?

As the price of WTI Crude Oil hits 2.5-year high prices near $70, what is behind this rise, and how much further can it go?

It would be very easy to assume that the global consumer ecosystem had taken a trip back to the 1970s when looking at the volatility of crude oil over the past few months.

Between March last year and now, crude oil has been the subject of more market volatility than most other tradeable commodities at the highest level since the dark days of the fuel crises in the 1970s which brought us monstrosities such as the 55-mph speed limit, the AMC Pacer and the four-cylinder Ford Mustang.

Pump Jack, Oilfield, Oil, Fuel, Industry, Petroleum

Image Source: Pixabay

2020s vs 1970s

A quick study of the price chart may well show similar sharp up and down trends, but the cause is slightly different these days.

In the 1970s, it was geopolitical. The OPEC countries using a curtailed fuel supply to attempt to coerce their Western enemies during times of war into submission, whilst the Western nations continued to fight what they considered either communism or tyranny depending on which OPEC state was involved.

In response, the oil-rich nations created a situation in which the average consumer, whose entire economic and domestic lifestyle ran on fossil fuel, would be made to beg for their fuel via a state-imposed rationing system.

Today, things are somewhat different. Modern houses carry the 'eco' tagline on their advertisements, there is an endless momentum in the appetite for electric vehicles. In the United Kingdom in May alone, new car registrations rose an astonishing 673% over May 2020, with 13% of the new cars registered being either fully electric or plug-in hybrid.

I have a plug-in hybrid myself. It is a full size, three-ton SUV and if driven on pure electric mode, it does 250 miles per gallon. I have only filled it with unleaded fuel once since I purchased it. Just 10 years ago, a similar vehicle would have chewed fossil fuel at an alarming rate of 15 miles per gallon.

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