Oil and natural gas prices have more than doubled this year, while sharp increases in West Coast electric power markets have heightened the controversy over electric market deregulation. A U.S. economic expansion lasting nearly a decade has lifted energy demand steadily, while price fluctuations and political uncertainty especially in the case of electricity have kept energy supplies from growing at the same pace. The bottom line for crude markets is that OPEC appears to have lost control of prices, at least in the near-term, because of events outside of their control. This is evidenced by the fact that prices did not respond at all to OPEC's fourth production hike, which began on October 31. Low product inventories, bottlenecks in refining, and inadequate tanker capacity account for OPEC's inability to nudge prices down.
Crude prices do fall over the near-term, but only gradually.
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