Wild fluctuations in oil market lead to instability, uncertainty

12/3/2013

Although the first decade of the 21st century is the "poster boy" for fluctuating oil prices, the
sudden shifts of the past few years suggest that this decade may yet break that record. A
series of reforms aimed at stomping speculation in the sector, enacted after the wild price
spikes in 2008, temporarily appeared to smooth out fluctuations in the market. However, a
cascade of unforeseen events (including a strike in Venezuela and ongoing political
instability in Nigeria) have caused analysts to question the global market's ability to keep
pace with demand. "This year, we've seen oil prices as low as $70 a barrel and as high as
$200," commented Goldman Sachs analyst John Rice. "It's difficult to say how a market as
essential to global economic health will weather any additional instability."

Rice and other analysts fear that as demand returns and supply cannot be met, prices will
skyrocket out of control, further depressing the global economy. Already, major American
automobile manufacturers are feeling the crunch as demand for personal vehicles has
bottomed out. "The US auto manufacturing is dead in the water," Rice stated in no
uncertain terms. "It remains to be seen what will happen to other petroleum dependent
sectors."