The price of gas oil is higher than ever and experts claim it will continue to increase day by day. This causes the rest of the prices to also rise. The critical political situation in the Arab countries is one of the things that influenced oil prices.
OPEC (the Organization of the Petroleum Exporting Countries) is an organization formed in order to regulate the supply and the price of oil. Its members are countries that produce and control most of the oil in the world. Oil is a non-renewable resource and these countries realized that, if the continue to compete against each other, the oil would soon ran out because its prices would be so low. The goal of this organization is to maintain the oil price at about $70 per barrel.
Seven hundred million barrels of oil are stored in the Strategic Petroleum Reserves of the United States of America. When it is necessary, these reserves can be used to increase the supply. This happened a few years ago, after Hurricane Katrina. About 20 per cent of the world's oil are used by the United States, out of which 65 per cent goes to transportation. The country is very dependent on imported oil.
Oil futures are an agreement to sell or buy oil at an established price and date in the future. Traders take into consideration the projected supply and demand in order to reach a price, as they bid on the price of oil according to what they think oil is going to trade at.
Crude oil prices affect the prices on gasoline. 55 per cent of the gasoline price comes from oil. The rest of 45 per cent is influenced by taxes and national or international distribution. These taxes, as well as distribution, are usually stable. Thus, the change in gasoline prices from one day to another comes from fluctuations in crude oil prices.
Oil prices are determined by commodity traders who bid on oil futures contracts. They bid according to many factors: current supply, the production quota set by OPEC, oil reserves, including what is stored at the Strategic Petroleum reserves, and oil demand.
Natural gas prices are also going up. The prices are influenced by: weather (during winter the demand for natural gas increases, as it is used for heating), fuels competition (when oil price rises, consumers switch to natural gas which is cheaper), natural disasters (hurricanes or earthquakes)and economic impact.
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