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Crude oil is one of the most sought after commodities in the global market. It is an important power source, which is used to power everything from automobiles to heating. Oil prices are affected by many things whether it's a man-made or natural cause. The demand and supply for oil kept on fluctuating and it's highly impossible to balance. When crude prices fall, more consumers use oil-based products, which increase demand, then soar oil prices creating an imbalance in the marketplace. The demand for oil hardly ever falls as there are limited alternatives for fuelling automobiles. In any case, if the supply of crude is interrupted, then its prices rise. Natural Disasters can obstruct the flow of crude oil and decline the supply mounting prices on oil. To exemplify this, Hurricane Katrina can be considered a good example, which disturbed about 25% of crude oil production in 2005. About 2/3rd of the world's crude supplies are controlled by OPEC (the Organisation of Petroleum Exporting Countries) members. They can opt to restrict supply of crude and cause prices to rise. This kind of thing happened during the embargo of 1973. An upward swing in the prices on oil means that you will have to rethink about your monthly fuel budget. This will affect your annual home expenses, resulting in upsetting whole budget. You will have to save more money for transportation or fuelling your vehicles. Towering oil prices won't affect you individually as it will increase transportation charges. Fares of taxis, car rentals, buses and other fuel driven public transport will rise. Not only transport, but also maintaining a vehicle will be a bit costlier because of high-ceilinged prices of engine oil and lubricants. The cost of transporting food stuffs will rise. This will influence sale prices of manufactured goods, which will have influence on daily requirements. Everything will ultimately lead to inflation because of the rising oil prices across the board in a country. This will affect your standard of living as your income will remain constant, but your purchasing power will decline. Inflation on relentless basis means slower growth rate of development for a Nation. Combined influence of both indirect and direct causes will lead to a poor standard of living if your source of income is lesser than your needs. Therefore, it's necessary to step forward to clutch crude oil prices before you have to tolerate all sorts of problems and you suffer from its side-effects. Kyles Humphrey is an experienced journalist in oil related fields, who frequently writes articles related to oil prices & indexes and crude oil including tips on investment in oil. Please visit oil.com for more details.
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