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With
the continuous fuel and oil price increase, many consumers and business
owners are beginning to wonder what is the cause of this rise and when
will it stop. These are common questions which currently have been
avoided by the media and the government, forcing drivers to pay for
this over priced fuel without understanding the reason behind the
ridiculous prices. The crude oil prices have risen 30% this year alone
which is higher than it has been since the early 1980s. These
continuing rising costs are causing stress on the economies throughout
the world and inhibiting any type of economic growth.
The rising demand is one of the largest reasons which can be attributed to the increasing oil prices. The
International Energy Agency reports this is the biggest demand in over
24 years. The rapidly expanding economy within China is one of the
largest contributing factors to this growing demand and therefore the
continuing rising costs. Professionals are stating that the rising
growth within the Chinese economy is going to continue for several more
years. The Chinese demand is currently up by 20% and it is not likely
it will stop here.
In regards to the U.S market
the demand has been consistently rising due to the strengthening of the
once unstable U.S economy. The greater need for crude oil which is
perfect for the transformation into petrol is based on the increasing
sales of the gasoline hungry SUVs. Drivers within the U.S are more
prone to choosing an SUV for their vehicle of choice than in any other
country in the world today, therefore boosting the requirement for
crude oil even higher.
The history of the oil price
per barrel increase started from the mid 1980s when the inflation of
the market adjusted the price per barrel to $25. During the year of
2004 the price continued to rise to $40 and then to $50. Due to a
series of events which include struggle within the middle-east
countries and the rising demand of oil, today the most recent price per
barrel has reached $ 138.83.
The chief
economist of the International Energy Agency states that the oil prices
are going to continue to remain high if not continue to rise as the
economies within China and India continue to expand rapidly. In regards
to more speculation regarding the future of the oil prices,
professional analysts are stating that because the oil exporting
countries are continuing to develop, they are keeping more of their oil
for their own usages. Therefore making less oil available to the rest
of the world, and whatever are available costs more because of this.
It
is important to understand that although the price of crude oil has
increased by 400% between the years of 2003-2008, the gasoline prices
have not increased in the same way. The price of auto fuel consists of
the production costs, processing, refining and yes the cost of crude
oil as well. There is a great deal of controversy and debate amongst
energy specialists that this spike in crude oil prices could create a
recession or even worse a global oil crash.
Throughout the world the
differences and increase in crude oil prices vary due to the type of
currency related to it. Crude oil is directly affected by the
currencies of any given country because this is how it is traded in the
markets. With this history and speculation for the future, it is fair
to say that the prices are not soon going to decrease. |
