Rising crude oil topping $90 a barrel starts dragging world economies into recession – emerging Asian economies subsidizing fuel price bleeding refinery profits
Fred Day
Oct. 19, 2007

Oil price is moving sharply higher set for 10% gain this week if oil can close above $91 a barrel. The effect is very long drawn even if speculators are behind the price rise. The rise in oil and gold to new highs simultaneously signal inflation. The inflation is caused by emerging economies like China and India that are subsidizing the fuel cost in their own countries and bleeding the profits of their Government owned refineries.

China, India, Indonesia and Malaysia are among countries that cap fuel prices to curb inflation, slashing earnings at China Petroleum & Chemical Corp. and Bharat Petroleum Corp. These mega oil refineries are running in deep losses serving the emerging economies creating bubbles of mega proportion.

The net result is gloomy. Rising crude oil topping $90 a barrel has started dragging world economies into recession. The recession in turn will blow the bubble in oil off and oil is going to have a free fall.

Crude has jumped 48 percent this year, reaching a record $90.23 a barrel in New York today. The rise is exponential and the uncharted territory does not have a resistance in the chart.

The relative calm is gasoline price at the retail pumps is significant. It may be signaling that the crude oil is going up to cool down Indian and Chinese economies that protect their own population from oil price rise through artificial pricing.

The world economies especially the emerging ones in Asia can blow up with a tailspin if oil crosses $100 a barrel. There will be not enough foreign direct deposit or investments to keep the oil price artificially lower in India and China.

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