Oil Prices

Changes in the oil industry have significant effects all around the world. Crude oil (which is refined to form petrol) is the world's most actively traded commodity and in 2005 the price of crude oil has risen to prices which haven't been seen since the 1980's.

The demand for oil

Global economic expansion is adding to the highest demand for oil in many years, particularly higher grade crude oil which is suitable for petrol production. In order to be more efficient, oil companies operate with lower stocks than in the past and this means that if there are supply interruptions there will be more of an effect on oil prices as there is not a huge back up supply.

What affects oil prices?

War, violence, racial tensions and natural disasters have all had an effect on oil prices in recent years. If supplies are kept low and an event which may cause problems with exporting oil from that area occurs then prices inevitably rise. Violence in the Middle East, ethnic tension in Nigeria and most recently the hurricanes that have hit the Gulf of America are examples of this.

What effects does increasing oil prices have on petrol?

When oil prices soar, there is a knock on effect on petrol prices, with prices hitting an all time high in September this year after hurricane Katrina left oil rigs and refineries out of action. Many people feel that fuel tax is the major contributor to petrol prices in the UK but, in recent years, the rising price of crude oil has also been a major factor in the ever-increasing pump price.