Is oil price justified ?

As you know the price of oil is going up everyday, while it is true that since oil is priced in $s, the price of oil has to go up, when the $ depreciates. however the price is still high by historical standards.

do you believe that the price is justified ?
what reasons do you think are contributing to this rise ?
what are possible solutions in the short term/long term ?

dear Srinivas ,..

Good question and answer is NO ,.. its not justified yet ( as much as i can see the consumption and production )
Next is oil quota is not limited. its unlimited deep inside the earth. Few days back i was reading an article somewhere which was saying that very deep inside the earth scientist were able to find out the lots of Oil in EUROPE ( most probebly DEAD SEA ). Will need to find that article again and write more over here later on( if i can find one).

Crude oil can rise more. Seeing getting double in next 2 yrs .

REgards,..
DArsh

I dont know much but what i read in dna economics page....this is not because o shortage....but actually how weak dollar has become so 110 dollar looks too much to us....
we might think now its 41 rs than how come dollar is weak...fact is our own currency too is not strong enough and it too has weaken aginst euro and others

Dear guys

Oil price rise is not just due to ecnomical reasons but the global politics and the major blame to this mess should go to US.

Here are some of the factors which are taking it up

1. The demand of energy has increased specially from India and china and OPEC is not ready to increase supply due to some constriants and their own reasons.
2. Supply constraints was due to middle east policies which US has adopted.
3. US itself has known oil resevers largest in world but their energy and environment policy and due to the cost of taking it out they are haven't started production yet
4. Middle east is major supplier of oil to the world as the production cost here is least.
5. Due to USD weakening naturally the 1 Crude barrel could cost more

Its combination of all but major US bad policies in Middle east made the condition worst. Also we din't find more resources and alternate energy sources yet.

current crude price combined of all the factors and speculators.. real price of barral should be USD 80 as far as projections are done here we sell to OPEC per barrel at USD 36 and mind their are many known resources its matter of increasing production capacity.

If things work out fine soon the price will come down. Buf if US attack IRAN 200 USD is what it will go.

You are right about there being a lot of oil in europe, but the cost of getting that oil is about 3 times the cost of oil now, so unless the price of oil goes to maybe 300 $, no one is going to think about digging that hard and deep in europe.

Also, there is a lot of oil in america too, but the same reasons for not being able to access it.

I am working with Joint operations at the core of persuan Gulf where Kuwait/Saudi Arabia and Iran share the border.
If increase the production in middle east itself and the known oil reserse you can soon see oil coming back to 80/90 $ but as i said its not just economics but to do with Global Politics that includes
Energy policies Globally. Its time to have a Global Energy policy and it can be done workign with producing nations and consumers together.
Also a need for alternate source of energy is since long under discussions..

So things will settle down in long term if all nations work together.
Current crude price can go in any direction. current prices can come down to 80$ if things work out if not 150$ is also possible.

So i guess, it means it is not going to go below 80 in the worst case. and looks from your post that world politics is also effecting the price. There are 2 terms that i hear, Days of Cheap Oil are over and Peak Oil is over. From Ratan's post looks like the Cheap oil is definitely over, as getting it out of Europe or US may cost a lot. Coming to Peak Oil Production, does it mean the world can never produce more than what we are producing right now, assuming politics does not effect it . i read that oil reservers in the middle east may last for 100's of years.

It is actually hurting us,the Oil PSU's are bleeding profusely,but are'nt all Prices Mkt driven .

current oil prices are not rising due to demand and supply mismatch or economic reasons...its rising coz ppl are fearing that usa will go thru a deep recession...which will have its effect on dollar....hence they are shifting their wealth in dollar to other assets like base metals, gold, oil...etc......

let us not get into this useless debate. As long as someone is willing to pay for it at even higher rate, the price is justified. During hysteria, are stock prices justified? During depression are stock prices justified? These are pretty useless questions. Go by what market is paying. It is unfortunate that we in India cannot seamlessly participate in global bull and bear markets for a variety of reasons. How many of you have invested in Chevron ot Ex Mobil or BP?