Influences And Effects Of Current Crude Oil Prices
Michalis 'BIG Mike' Kotzakolios


Defined Tag: Current Crude Oil Prices.

Not surprisingly, crude oil prices have a massive effect on other prices throughout the economy. In fact, it may be the single commodity that can, and often does, cause prices in virtually all aggregates of the economy to rise simultaneously. Not only is manufacturing affected, but transportation and the service industries are also affected at the same time. These increasing costs many initially cause companies to cut costs wherever possible, but they will eventually result in escalating prices; and then escalating wages, as workers require higher ways to purchase the same amount of goods and services.

Consumers are also bearing the burden of the current high crude oil prices. Citizens of many countries became accustomed to extremely cheap gasoline to fuel their trucks and sport utility vehicles. Naturally the current near-record oil prices lead to equally high gasoline prices. Fuel used to be a negligible expense. Now it is a large budget item for cash-strapped consumers. Although small car and hybrid car sales are climbing, both types of vehicles are dependent on high-priced fossil fuels.

Many circumstances have united to cause the current crude oil high prices. One was Hurricane Katrina, which disabled much of the offshore oil drilling capacity in the Gulf of Mexico. Another is the continuing political unrest in the Middle East, a major oil producing region. There were radical attacks in the U.S., with the subsequent American retaliation. Major political upheavals, war, and even rumors can spark stock market activity which can drive the current oil prices even higher. Many events, real or imagined, can negatively affect crude oil's current price.

Of course, crude oil is not the resource of a single nation. Rather, it is a wordwide resource, perhaps the one on which the global economy is most dependent. Additionally, of the many worldwide resources employed, it is one of the most precarious. Commentators are constantly guessing when crude oil prices will go up or down; they are also guessing whether exploration will yield new viable reserves of crude.