Proclamations of economic recovery in the past week in Japan, France and Germany, and soon in Britain and America too, may signal the end of the Great Recession of 2007-09, albeit bumpily. As things stand, though, this month may also signal the beginning of the end of something far more historic and significant: the age of oil.
Given how bleak the world looked as this year began, it feels remarkable to be seeing growth again so soon. But it is even more remarkable that the world is emerging from such a severe financial shock and slump with its most basic fuel, crude oil, priced at close to $70 a barrel, seven times its price of a little over a decade ago and double the level it was as recently as March.
So this must mean the rebound is even stronger than we think, with demand for oil soaring again? Not at all. Admittedly, this is a pretty opaque market, with many countries treating oil stocks as an official secret. Still, analysts at Banc of America Securities-Merrill Lynch reckon that global oil demand has been three million barrels a day lower in the second quarter of this year than in early 2008. They don’t expect it to get back above that until 2011 at the earliest.
No, the explanation for this potentially recovery-sapping (and certainly wallet-threatening) resurgence in the price of oil, and thus petrol at the pump, lies on the supply side. So, too, does the prospect of prices rising higher still, towards the extraordinary $147 a barrel reached in July 2008, or even beyond.
