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COMMENTARY

Analysts warn of soaring fuel costs, but who calls the shots?

Text by: Owen FAIRCLOUGH
2 min

The International Energy Agency thinks fuel prices will rocket unless the world gets serious about climate change. But the fluctuations of the last 12 months might suggest otherwise.

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It sounds alarming: oil will cost $190 a barrel by 2030.

That's the thrust of the International Energy Agency's outlook for the next 12 months.

The IEA reckons a mixture of dwindling oil reserves and carbon taxes increasing the cost of fuel at the pump are both contributory factors.

Let's set aside the conflicting allegation that the IEA has in fact exaggerated the amount of oil we have left to stop panic buying and keep prices stable.

The past year has proved that making predictions about the price of oil can be a dangerous game.

Did you imagine that oil would hit nearly $150 a barrel last year, only for it to go through the floor to just over $30 a barrel earlier this year?

True, it's crept up to around the $80 a barrel mark, but most economists think that's about right - even if suppliers don't pass that drop on to you at the fuel pump.

And consumer trends are changing fast.

The conventional wisdom was that Americans, weaned on gas guzzling SUVs,  wouldn't drive the kind of small cars us Europeans are used to.

Not only are they driving smaller cars, they want them greener: sales of Toyota's hybrid Prius models have dipped in the US, but that's because its rivals are muscling in on a market they all want a piece of.

I'm not suggesting for a minute that we shouldn't care about fuel reserves nor curb the search for alternative resources.

But consumers have proved beyond question in this recession that ultimately, they call the shots rather than OPEC or the IEA.
 

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