Prevailing high prices for crude oil show that efforts to reduce reliance on fossil fuels, which drive most production activities and power our daily lives, are imperative. West Texas Intermediate, a benchmark in oil pricing, went above $98 per barrel on New York's oil futures market Nov. 7 and hit an all-time high of $99.29 per barrel on Nov. 20. Crude oil prices remain about twice as high as they were at the beginning of the year.
Although the Organization of Petroleum Exporting Countries increased its oil production by 500,000 barrels per day at the beginning of November, it was not effective in lowering oil prices. The rapid emergence of China's and India's economies as big consumers of oil is not a factor that has contributed to the recent hikes in oil prices. (The United States alone is still consuming about a quarter of the world's crude oil.) Geopolitical situations surrounding the oil-producing countries in the Middle East have not dramatically changed recently.
Attention must be paid to the fact that oil prices started soaring after the subprime loan fiasco surfaced in the U.S. last summer. Faced with the subprime problems, speculative funds started flowing into crude futures markets. This move has pushed crude oil prices far above the normal level, which is determined by supply and demand.