Concern as oil price rises above USD 66

11th August 2005, Comments 0 comments

Updated 12 August 2005, BRUSSELS — As crude oil prices rose above USD 66 on Friday, concerns for the domestic costs in Belgium intensified.

Updated 12 August 2005

BRUSSELS — As crude oil prices rose above USD 66 on Friday, concerns for the domestic costs in Belgium intensified.

The high price has been estimated to cost the Belgian economy EUR 3 billion or 1 percent economic growth.

And prices reached new heights on Friday, the fifth consecutive day of record prices. A barrel of crude oil was costing USD 66.13 in New York and USD 65.88 in London.

On Thursday, prices had climbed above USD 65 in New York, signalling higher fuel costs for Belgian motorists and higher gas and electricity prices.

Analysts believe the price may breach USD 70 in coming weeks, newspaper 'De Standaard' reported.

The record prices are being blamed on bulk buys by speculators and concerns over further refinery problems.

The price of oil has doubled in the past 18 months and is in sharp contrast with the end of the 1990s when it was priced at just USD 10 per barrel. Energy experts are now discussing an "oil crisis".

Prices have risen in recent days due to a series of breakdowns at refineries in the US and tensions in the Mid-East.

Terrorist attacks are being threatened in Saudi Arabia and there is chance that sanctions will be imposed on Iran due to its nuclear operations.

Bache Financial analyst Tony Machacek also said "the strong oil price is partially due to speculation. Speculators are gambling on still higher prices".

Domestically, energy specialists have said the prices will eventually be passed on to Belgian consumers. However, the new records might not be felt until next year.

Families in Belgium were warned earlier this week to expect sharp rises in gas and electricity bills over the coming year. The increased cost of electricity and gas might amount to EUR 25 per month and is blamed on the high price of oil.

Heating fuel, diesel and petrol are already at record prices in Belgium and are set to continue rising due to the high cost of crude oil.

Fuel distributors have warned the public not to wait until the first cold snap to fill up their heating oil tank. There is a chance that supply will be delayed by several days due to high demand.

And sales of wood-burning stoves have risen by 20 percent in recent months. The rising cost of oil is prompting consumers to seek cheaper heating.

Energy consultant Wood Mackenzie is also warning that diesel shortages might occur in future if no extra investment is made in the refinery industry.

Initially published 11 August 2005

[Copyright Expatica News 2005]

Subject: Belgian news

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