Oil Frustration for Both Insiders and Outsiders

The U.S. is not the only country feeling the pang of soaring oil prices. As American citizens cut back on Memorial Day driving, European frustration with high fuel costs grew louder as well. Yesterday, truck drivers blocked a highway in Britain in protest and demanded a $1.85 discount on diesel. In France, fishing boats blocked oil shipments to a depot near Marseilles. The heat surrounding the fuel price issue has lead French President Nicolas Sarkozy to propose an EU cap on sales tax on fuel to help reduce the impact of skyrocketing oil prices. However, the Foreign Policy blog contends that “talk[s] of fuel tax completely misses the point—only an increase in supply will make a difference in the long run.”

Brazil, on the other hand, responded to price increases by announcing a $5 billion plan to establish deep water oil finds by building new ships and hiring oil rigs. Western nations, however, aren’t the only ones angered over record high prices. Indonesia announced today that it would withdraw from OPEC at the end of this year. As a net importer of oil, Indonesia, the only Asian member of the cartel, would like prices to fall; the other 12 members of OPEC, on the other hand, would like prices to stay high. To learn more about this issue check out the Financial Times’ in-depth coverage of the oil market.