The major determinant of international trade around the world has always been crude oil and natural gas. Every country needs fuels for transportation purposes and industrial uses which is why it has remained an important factor. Due to this, energy experts reckon that in the near future, the demand for crude oil will increase drastically. As a result, oil exploration companies will have to search for new oil mines to meet the requirements of the world at large.
In the United States, the prices of petroleum or crude oil have been influenced by several international factors. In the twentieth century, the United States government began to control the production of crude oil. In a bid to preserve the energy sources, the government put a specific limit on the production level and the prices too.
The cost of crude oil influences out lives significantly as much as we might not be aware of the amount it is retailing at. Below is a list of examples of how the cost of crude oil impacts our lives.
Effects of High Prices
The variation in prices of crude oil directly affects the petroleum products we purchase. There is an immediate relationship between the cost of gas at the gas station and the elements used in the production of the fuel. This means that, if there is an increase in the cost of crude oil, the gas prices at your local gas station will skyrocket too. IN addition many other things you may buy can rise in price. The price of oil directly effects transportation costs, which is then passed down to the consumer through their spending. So overall, it can have a major effect on the economy.
Other elements affected by the increase in prices of crude oil include a few additional products such as oil blends and machine oils. However, this impact is not realized immediately with the rise in gas prices. It has a more long-term effect where fuel-related products continuously soar in prices months later. The auto supplies store continually add a few cents to every container on their shelves.