Oil Prices

Oil prices is generally affected by some extraordinary events that happen in the world, so if there is a huge disaster in an oil exporting country, for instance, then the price will rise. In economics there is a principle that says, higher the supply, lower the price so what oil exporting countries do is to limit their export capacity of oil and so the price of oil will go up.

The agency that determines oil pricing is called OPEC which is formed from the 12 biggest exporters of oil in the world. Right now a crude oil barrel price is around 76 dollars per barrel which is not that high compared to other times. Some economists say that current oil prices are very good as anything above this, would harm the economic recovery, while low prices would lead to underinvestment.

The most famous crude oil history that will always be remembered is that of the year of 2008 where the price of oil reached over 150 dollars per barrel and this made all the economies of the world tremble in fear as not everyone could support those high costs for oil. In fact many are of the idea that the incredible recession started all because of those incredible prices of oil.

The oil and gas prices are linked to each other so if oil prices are high you will see that even gas prices are high. When the price of oil is high, demand for oil will eventually decrease so people would use gas. So in such a scenario suppliers react by also increasing oil prices.

The price of oil can also be affected by the rise of demand from China and India which are two of the most highly rated developing countries. When they ask for more oil this would literally increase demand a lot, so prices become higher. Even the value of the dollar has done its work so that oil prices get higher. As the dollar value decreased by around 40 percent in these last 6 years, one must pay more to buy the same product.

What experts in this sector fear is the demand that Asian countries are doing for oil. Asians are increasing their demand for oil by about 2 million barrels per day when the price of oil is at around 75 dollars. So as they are increasing the demand at such a phenomenal rate then it is clear that the price of oil will not stay in this position for much longer and will have to rise a lot.

Even seasons take part into this war against oil pricing. In winter the United States uses less oil than in summer and only the northern part uses heating for their homes as in summer all the country uses air conditioners to cool down their house. As a result to this, demand for oil in winter is lower, so the prices normally go down.

One could say a lot what effects the prices of oil but even we determine the price of oil as we are demanding in some way or another. If we use less energy and use renewable energy instead, the demand for oil decreases and so even the price will go down. So even we, each and every one of us to a certain extent have a very important role in the prices of oil.