Who Cares About The Price Of Oil?

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Who Cares About The Price Of Oil?

5th November 2007

It is Monday morning and the beginning of a new week. On Saturday evening I was invited out to a nice spot by a couple of friends. As usual we got into a heated debate about the price of oil recently and how it affects us in our everyday life. Now folks, whether you care or not, like it or not the fact remains that whatever goes on in our economy and the world economy affects us as consumers at the end of the day. The price of oil per barrel on Friday 2nd November 2007, stood at $96 per barrel as futures werebeing traded on the New York Mercantile Exchange.

You might wonder where we use oil or oil related products in our everyday lives? Our gas in our cars, heating in our homes, increased air fares for our holiday trips by air, etc. Folks, as consumers we pay for everything. If fuel expenses for American Airlines or Delta increase, guess what? They in turn increase ticket prices and we pay. In order for most businesses to cover their higher fuel expenses and still make a profit or break even in their business budget, they will make us pay extra to cover their cost. In a nutshell, that's how business works.

So what Kevin? Who cares about the price of oil? How does it affect me anyway? Well, the most common sense way of looking at it is that if the price of oil goes up, our gas price at the pump will rise. So far this hasn't been the case but it's coming. Below is a quote from the South Florida Sun-Sentinel in an article by Tom Stieghorst.

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"We're just now beginning to see the impact of $80 to $85 oil trickling down to the consumer level," said Stephen Schork, editor of energy newsletter The Schork Report, who predicts gas prices will go up about 15 cents a gallon by Christmas and could go higher by as much as 35 cents. On Thursday, average gas prices in West Palm Beach crossed the $3 a gallon threshold, up almost 3 cents overnight. In Fort Lauderdale, they hit $2.95.

Can you see how everything going on concerning the record high oil prices affects you and me? Another report from Reuters states as follows:

OPEC oil ministers have noted that although prices are rising to record nominal levels, inflation and the dollar have softened the impact. Some analysts say investors have been using oil as a hedge against the weaker dollar.

The Organization of the Petroleum Exporting Countries, source of more than a third of the world's oil, started to reduce oil output in late 2006 to stem a fall in prices. Fewer OPEC barrels entering the market helped propel this year's rally and consumer nations led by the International Energy Agency for months urged OPEC to pump more oil. At a meeting in September, OPEC agreed to increase oil output by 500,000 barrels per day from Nov. 1.

OPEC are the oil cartel as I like to call them. These are the world's largest oil producing nations. Now obviously they benefit a great deal from high oil prices. Now you might be asking the question about alternative energy besides oil? Research is still being done and although it is expected that these products will be available across the globe in a few years from now, until then we still have to use the oil from the OPEC nations.

My title to this article asked the question, who cares about the price of oil? At the beginning I told you I got into a heated debate with some friends over this question. Given the facts about the price of oil per barrel from this article, I hope now you do care about the price of oil because it affects us deeply. Remember that whatever happens in the economy will affect us because as consumers, ultimately we pay the costs for business.

"Knowledge is like money: the more he gets, the more he craves." - Josh Billings

Comments (10):

Jaleel Says: The price increase in oil has been shocking and I was waiting to see when it would eventually get to the gas pumps. It looks like there will be less spending money for holiday gifts! | 11.05.2007 |

Brian Says: I already felt the pinch of a slight gas increase in our area. If the prices are set to rise again it's going to be hard to take long drives this holiday season | 11.05.2007 |

Minnie Says: Airline tickets are increased that means less money to spend on shopping and that is even more so since gas prices will rise too | 11.05.2007 |

Vince Says: The price per barrel rising meant it is inevitable for gas to rise at the pump | 11.05.2007 |

Ray Says: This is all about greed on the part of the oil companies. Oil is now being traded like stocks and this crazy high will continue for a while | 11.05.2007 |

Xeno Says: This is all about greed on the part of investors. Oil is now being traded like stocks and this crazy high will continue for a while | 11.05.2007 |

Warren Says: If OPEC keeps on restricting supplies the price will be kept high. I think not only is it greed on the part of investors but on the part of the oil companies and oil producing countries | 11.05.2007 |

Anthony Says: This is clear evidence that the rich guys control the world economy. If they raise the oil prices they make more money | 11.05.2007 |

Preston Says: From the beginning when oil prices were rising I knew that it would eventually trickle down to the consumer. Like you so rightly said Kevin, we as consumers ultimately pay for business costs | 11.05.2007 |

Carol Says: I think we need to get out of Iraq and stop sanctions on Iran and mind our own business maybe then oil prices will go down | 11.05.2007 |

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Who Cares About The Price Of Oil?

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