As crude oil becomes more and more of a rare resource, its price continues to rise. Therefore, the price of the gasoline product also continues to rise. Actually, compared to many European countries, the price of gas in the U.S. is low.
Other factors influencing the price of crude oil include market volatility from turmoil in the Middle East, where we import most of our oil from. Although demand decreases somewhat in a recession due to cutbacks on spending, it is not significant enough to outweigh the scarcity of the supply and its effect on market price.
Also, after the BP oil spill in the Gulf, deepwater drilling for oil domestically was temporarily suspended. This made us more heavily dependent upon imports, which continue to rise in general, because of scarcity, high demand, market volatility, and monopoly on the supply.
There was no impact on imports from either the spill last summer or from the moratorium on drilling. None of that activity affected existing oil production, nor did it impact the price in any significant long-term way.
“More imports” of any sort would not affect the price of oil anyway. Oil is priced in a global marketplace; US oil costs about the same as Saudi or North Sea or any other oil (small variations reflect some geopolitical factors as well as the nature of the oil).
The price of oil DID decrease, dramatically, at the start of the recession – from $147 per barrel in summer 2008 to $35 per barrel in winter 2009. Its increase since then has been related to the gradual recovery from the recession (US car drivers are consuming as much gasoline as they were in pre-recession 2007). The most recent increase is due to that continuing perception of recession recovery, together with supply disruptions (real and anticipated) because of the troubles in North Africa and the Middle East, as well as the weak dollar. The price fallback today (April 12 2011) is mostly because of fears that the high price will essentially impact the rate of recession recovery, and will therefore reduce consumption. That perception may change this afternoon, tomorrow, or next week.
Great question. The increase in fuel prices such as what we’re seeing at the pumps, can be attributed to political and social turmoil in the oil rich Middle East. Although The U.S doesn’t obtain oil from Libya, the recent outbreak of war in this country has lead to a decrease in oil production which affects other countries and strains oil availability as a whole. This indirectly affects us, the U.S, although as I mentioned earlier, we don’t depend on Libya for oil. Less oil results in price spikes which are heavily felt at the pump. Supply and demand is the name of the game and in this day and age, the demand for oil is at an all time high. Lastly, Oil companies are incredibly greedy and dishonest so they see any situation whether it relates directly to us or not as a great opportunity to speculate and inflate petroleum prices. They don’t need much of a reason to increase the price of a barrel of oil.
The US does import small amounts of oil and oil products from Libya, most recently about 70,000 barrels per day, tiny in the grand scheme of things. Oil companies have no role in the increase in prices; they cannot and do not, and the references you cite do not support that idea. Oil is priced in a global marketplace. Daily fluctuations depend on perceptions of supply and demand changes; longer term price variations depend on actual supply and demand changes.
Click here to cancel reply.
Sorry,At this time user registration is disabled. We will open registration soon!
Don't have an account? Click Here to Signup
© Copyright GreenAnswers.com LLC