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A temporary reprieve

TWO YEARS ago, Petroleum Economist listened to a group of bankers explain why high oil prices hadn't, this time around, triggered a global recession. Now, with the world economy in crisis, it's the bankers themselves who are being fingered as the culprits – their faith in a financial edifice built on the foundations of an over-leveraged consumer economy proving reckless.

And suicidal. After the collapse of Bear Stearns and Lehman Brothers, and the bail-outs of Merrill Lynch, AIG and various other financial institutions, it is clear that the self-proclaimed "masters of the universe" on Wall Street got things badly wrong.

Given the flimsy state of the world economy, it is no surprise that oil prices have fallen from this summer's record highs. Projections for oil demand from the developed economies have fallen as the threat of global recession has spread. Last month, the International Energy Agency (IEA) again cut its forecast ...Click here to continue reading A temporary reprieve