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As the oil prices touch $120, does it answe questions or raise new questions. On the face value, it raises questions of inflation worldwide. But the rising of oil prices confirms the intrinsic strength of the world economic system.

Why and how?

The current consumtion of depetable sources of energy compared to other sources of energy is so high that at the current rate of depletion (consumption), all the resources worlwide will be exhuasted between 30 to 70 years.

This rate of consumption of fossil fuels needs to be urgently lowered. If the world economies are not able to lower the consumtion at current prices $120, it is likely that the prices of oil will further increase.

In addition the higher energy prices will encourage Research & Development, exploration of new and alternative resources of energy.

Considering the great harm currently caused to the environmnrt by burning of fossil fuels, if the increase in prices results in lowering of fossil fuel consumption, it will be a big victory for the world economic system. If the consumption is not lowered, the prices are likely to increase further to reduce demand by at least 5%-7% in the next 2-3 years.

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