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Thursday, Dec 12, 2019

‘When will oil actually come down?’

Daniel Fineren, a journalist, tells how he was found unable to answer an question on the soaring oil prices that was put to him by his taxi driver while he was returning after attending the the World Petroleum Cong.

business Updated: Jul 14, 2008 22:06 IST
Daniel Fineren
Daniel Fineren

I sank into my seat in the air-conditioned taxi. Heading home from the World Petroleum Congress, exhausted by days pestering top oil producers about when prices might come down, I gazed at the parched scrubland around Madrid.

“Tell me,” the taxi driver interrupted. “When are fuel prices going to fall?”

He peered accusingly in the rear-view mirror.

“Every day they just go up and up. But when are they going to go down?”

That question again.

Sitting in the suit I bought in Madrid for the event for 69 euros — that’s less than two tanks of diesel these days — I was flattered to be mistaken for a wealthy expert.

Oil has risen seven-fold since 2001, scorching the fingers of any highly paid forecaster who said the rally was petering out. Goldman Sachs, the biggest investment bank in the commodities sector, has tipped prices to hit $200 a barrel within two years.

I knew I couldn’t honestly tell the driver any relief was on the way, and my own survival strategy of cycling to work clearly wasn’t going to work for him.

So I stole Saudi Oil Minister Ali al-Naimi’s joke that if I knew how to predict the future I would be in Las Vegas making a fortune, and apologised for just being a reporter.

“You're a journalist? Oh, I’m sorry for having a go at you!” the driver apologised. “We have to go through really tight security to pick people up from that conference ... there must be some really rich people in there...”

My taxi driver's questions continued in a softer tone as we neared the airport where my plane — filled with ever pricier jet fuel squeezing the airline's profit — would hopefully get me back to Britain without a sermon from the pilot.

But they didn’t get any easier to answer.

“I now pay about 36 euros every day for diesel,” the driver of the mid-sized saloon taxi said, adding diesel had risen to over 1.30 euros from 90 euro cents a litre last year.

“If the euro is now worth more than a dollar fifty, why am I paying so much more to fill up?”

That would be tough to deal with in the 10 minutes we had together on the empty highways feeding into Madrid's new terminal building.

The strength of the single European currency against the pound had been really noticeable during my stay, so I could understand why euro-zone consumers might expect goods priced in other currencies to be cheaper.

Less than a pint of beer in a simple street cafe can now easily cost four pounds -- almost unheard of even in London -- after the euro gained around 15 percent against sterling this year.

I tried to explain that the price of oil had doubled in the last year, largely because of the weak dollar, but that the euro had gained only about 15 percent against the U.S. currency, so oil was still more expensive in euros.

The ride to the airport was thankfully not long enough to tie myself in knots trying to explain all the interrelated factors behind the huge rise in fuel prices.

We arrived at departures with the driver concluding that electric or natural gas-fuelled transport might be the best long term solution.

Then he hit me with airport and conference centre service surcharges that took the bill to 20 euros.

Not bad for 10 minutes' work. Next time I'll take the tube.