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The Future of Business in Emerging Markets by Nenad Pacek

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Oil price variations

To illustrate the insanity, let’s examine oil prices (oil is the craziest example). Here are a few facts about oil – you can draw your own conclusions about its sudden price movements.

1.   Oil fundamentals have not changed much in the last 20 years. Yes, emerging economies are consuming more, but developed markets are consuming less. Oil demand/consumption has not exceeded 1.7% per year in the last decade (except for being a bit stronger during 2010’s bounce back from 2009 lows) and yet the price has shot up from an average of US $20 per barrel in the early 1990s to $147 in 2008. It fell from US $147 to under $40 per barrel when the global crisis started in 2008, although the actual fall in oil consumption around the world ...

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