Tag Archives | Credit Crunching

Why is the price of petrol falling?

During the late spring and summer of 2008 as petrol prices were rising drastically, we were told various different reasons behind those rises. It was because of the weakness of the dollar, the increase in demand and the approach of peak oil and the impact on supply. Or all of the above, or some of the above.

However, there were strong suspicions that a significant proportion of the rise was due to the market speculation on the part of investment banks, commodity traders and hedge funds. This article (albeit coming from a particular “angle”) cites that 60% of the rises we saw earlier in the year were due to speculation alone.

Not being a financier or an economist, I don’t know myself, and I haven’t seen any specific evidence for any of the arguments.

However, what is very noticeable is that since many of the worlds larger financial institutions have become strapped for cash because of the fallout from the “credit crunch” caused by their exposure to sub-prime mortgages, we’ve seen a significant decline in the price of oil.

In fact, we’ve actually seen a decline of about 60%. Spooky!

Do the oil speculators from late spring and summer now have no more spare cash to play with on the oil commodity markets, and thereby causing the price to drop?

Did they in fact try to manipulate/speculate on the oil commodity markets earlier in the year in an effort to actually bring in some extra cash quickly to cover the hole in their finances that they saw coming because of the sub-prime problems?


Christmas Parties – What would you prefer?

There’s been a bit of coverage last week (here and here for example) where 79% of firms in a survey will be trying to avoid having a Christmas Party in order to save costs.

Given everything that’s going on in the world of finance at the moment, it’s hardly surprising that this is being considered by firms.

But the coverage in the papers is a bit severe:

Most firms playing Scrooge over Christmas parties this year

Scrooged: Mean bosses put the boot in

Many employers have had to take an Ebenezer Scrooge-style approach to Christmas spending this year and deny staff a night out.

Ebenezer Scrooge is alive and well in the workplace as Irish bosses blame the economic downturn and cancel their Christmas party

And not a tabloid quote in that juicy set from last week.

I appreciate that there are team bonding aspects to such Christmas nights out, but it’s likely that teams will organise their own nights out anyway without blowing big wads of cash on a big night out.

What are your thoughts? I know that if the choice was up to me, I’d much prefer a little extra cash each month during the year rather than getting a free night out at the end of the year.


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