Are Lower Fuel Prices Here to Stay?

Comparatively few, if any, motorists will be lamenting the global fall in oil and associated fuel costs over the last year or so.

It has been extremely good news for ordinary drivers but also professional organizations such as bus companies, haulage firms, limousine hire companies and taxi drivers.

The big question for everyone is, are these lower prices here to stay?

Nobody knows

In a sense, it's possible to answer the question immediately by simply saying that "nobody has a clue".

However expert the global oil industry forecasters are, their track record in predicting oil price increases and reductions isn't exactly a glorious one. So, probably the only objective answer possible is that it's "anybody's guess".

However, look a little below the surface and it's possible to see at least some issues that could lead to higher prices in the medium to longer term.

Uncertainty in the Middle East

Historically, some of the biggest oil price rises have come about as a result of turmoil in the Middle East region.

Few people can dispute that right now the situation in and around several of the major oil producing countries in that area remains at least chaotic and at worst a human tragedy on an unimaginable scale.

Unusually, these troubles appear to have reached their peak at a time when oil prices were falling but if they spread into the heart of the major oil producing nations, something that some people believe is a real possibility, then it is difficult to see how that can have anything other than a detrimental effect on global off prices.

Coming out of recession

The chaos inflicted on the global economy by the events of 2008 through to 2012, continues to resonate through business markets today.

Confidence continues to be fragile and consumer spending in many countries of the industrialized world remains inhibited by worries about the strength of their economies.

Even so, there are some indications now that certain economies are beginning to push more strongly into a healthier and balanced economic recovery. It doesn't seem to be too unlikely that if that continues, global demand for oil is likely to increase and if production does not, then price increases may be an inevitable consequence.

Sovereign debt worries

All over the planet governments are worried about the extent to which their spending and borrowing continues to hugely exceed their available income.

Even those who have an avowed intention to reduce spending and 'balance the books' have, to date, largely failed. Sooner or later it's possible to speculate that the temptation to 'top up their coffers' by dipping into consumers' pockets through a range of tax increases, particularly on fuel, may prove to be an irresistible measure of desperation.

If that happens, the owners of gas-guzzling cars will be thinking again about luxury limousine hire for those special occasions where they actually need a substantial vehicle and downgrading to something more economic for normal use!

Summary

Businesses and consumers have become accustomed over recent years to relatively low and in fact continually declining oil prices.

It seems uncertain that can be sustained for an extended period into the future though, as always, these things are notoriously difficult to predict.

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