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Recently, crude prices crossed $70 a barrel as the hurricane Katrina hit the United States and brought production in the Gulf of Mexico to a halt.
All this has led to talk of sustained high prices in the days to come. But, as history tells us, oil is a cyclical business: prices go up only to come down again. So the question that needs to be asked is: why have oil prices been going up and will this increase continue in the days to come?
The oil cartel
Since the mid-eighties, the Organisation of Petroleum Exporting Countries (OPEC) has been acting as a swing oil producer of the world. That is, OPEC produces only to fill the gap between global oil demand and production by non-OPEC countries...
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