|
The inverse ration of supply and demand triggers the prices on any commodity go higher. Other factors such as speculations about prices and the industry's future also affect the prices on oil as a commodity. Today, the entire world is going through fuel crisis. Here are some important aspects that affect the prices on oil and the industry in its entirety. Experts of oil industry also say that prices on oil could hit $100 or $150 a barrel in near future and the worse part is that the market does not have a clear vision about it. They also claim that the industry's 'heads in the sand' stand would drag the industry into storms and the prices on oil would definitely explode. The results of not being aware of the worse possibilities in the oil industry in near future could plunge it into dire situations. Prices on oil were expected to increase as the ratio of demand and supply was not equal. An increase in demand triggered the oil prices go higher. As the stocks of oil are limited, if not less, the experts say that we will be able to drill the oil out for longer time but it is going to be expensive due to limited stock. Today, biggies in oil industry are investing quite wisely but the investments need to be heavier in developing an alternative for gas and oil. We should focus on inventing other energy sources that can be utilized as a fuel. As per the latest information from the US Energy Information Administration, the global liquid fuels production in August had decreased by almost a million barrels per day than that of the same period of the year 2006. The administration also said that the whole world will have to go through oil supply shortage during year 2012 and thereafter. Another aspect which is considered as a deciding factor of prices on oil or any other commodity is uncertainty of supply. When it comes to oil industry, many factors such as drilling accidents, warfare, disputes in oil producing countries or regions greatly affect the supply chain and so the prices on oil. Warfare in Nigeria, disputes in Syria, Yemen and Israeli-Palestinian territories, explosions of pipeline in Saudi Arabia had drastic effects on oil industry recently. In the middle of this entire unrest, speculators try to predict future prices and price shocks. When the predictions prove to be right, crude oil is bought for less amount and sold for higher price while predictions go wrong, the oil is bought for more amount of money than that of its sold for and eventually, there creeps in the loss. Oil speculators also affect the prices on oil greatly, just as they do in other commodities' futures markets. Kyles Humphrey is an accomplished journalist in oil related fields, who regularly writes articles related to oil prices & indexes and crude oil including tips on investment in oil. Please visit oil.com for more details.
Related Articles -
Oil Prices, Prices on Oil,
| 
