Oil Price Hike
July 17th, 2008 at 11:31am Under Oil Price 2008+ Oil Price 2009+ Oil price+ energy prices+ peak oil
The recent hike in prices of crude oil and fuels has affected the life of common man. It was rather a slap on his face which has put the nations with economic problems in serious desperation, affecting their growth. Rather than to criticize the government and putting the blame on each other, we have to go for an analysis which will help in evaluating the reasons behind this increase in prices of essential oils and fuels.
The real reason behind such an increase in the price of oils is the scarcity of oil supply. The critical reason behind such an increase is closely connected to the global financial market. Even though this is not a single reason, this is in fact a primary reason. The increasing demand in the industrialized nations for a huge supply of oil made oil an essential commodity with large volume of trade around the globe.
The oil is sold and priced in dollar. So speculation is the major reason which dominates even the reduced supply, in case of an increase in oil prices. When dollar loses its value, oil producers will have to increase the prices. Then only, they will be able to deal with the losses they are facing in converting the dollar into their local currency. The sinking currency will, hence cause excessive debt. This makes increase in oil price and decrease in dollar value, the two sides of the same coin.
Common men are the direct victims of this high increase of oil prices. When the price of all essential commodities increases, they find life difficult to conquer. The jump in the price of petrol puts them in great trouble. The increased energy bills make life a night mare for them. Global economy is both directly and indirectly affected by the hike of oil prices. The leading countries in the world are subjected to great economic crisis when their customers face financial problems due to hike in oil price.
Inflation will grab the economy as a whole. Almost all countries are subjected to this problem, which causes an immediate attention essential towards this problem. The worst case can even lead to increase of crimes when money becomes a problem for common men. Unemployment caused due to companies trying to reduce the cost on employment will make economy to fall heavily. Economic imbalance and increased travel costs are some other areas where we can see the worst sides of increased oil price.
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