A peek into the future-Water trading

Rounak Jhawar

Investment Banking and Wealth Management

December 08

4th April, 2019

Today prices of water made a new high, it touched a record price of €50 per barrel before closing at €47.52 a barrel. In the futures market the water prices surged upto €60 a barrel. Analysts say that the recent increase in the price of water is not due to the speculation , rather it is attributed to the acute shortage in fresh water world wide.

With the increasing global warming and the continuous depletion of the ozone layer this has lead to the melting of snow capped mountains and the snow in the artic and antartic region. There has been an increase in the level of sea water, but fresh water has become as scarce as ever. The governments of all the countries are promoting water distilleries so that it doesn’t have to depend on only the natural sources of water and can produce more water which will increase the supply of water to meet its demand so that equilibrium is reached.

Most economists relate this increase in the price of water in the last couple of years to the prices of crude oil in the year 1971 and the year 2007. They say that after the invention and wide use of alternate sources of energy, prices of crude oil became stable and in fact came down to the current level of €30 a barrel. But for water there is no substitute which can be alternatively used to meet the shortfall in supply. Water is the most essential commodity for human existence and this trend in the prices of water is endangering the human existence on this planet.

Most traders say the prices of water will continue to increase like this till the end of 2021, when India would start production of fresh water at its 4 new distilleries which would be able to meet the shortfall in supply and only then can the prices of water be expected to get stable. Some analysts say that the prices of water would double by the end of this year, which will make life difficult for the common man.