Finance Blog

Oil prices are a large concern to the global economy. Most of the industrialized world operates on oil. Therefore it is no surprise that the price of oil is one of the most scrutinized financial numbers. Manufacturing, transportation, goods and services, and of course gasoline all depend on the all-important oil price. A fossil fuel based economy needs oil to run, and when the price fluctuates, many aspects of that economy are affected.

The most obvious victim of the rising price of oil is the cost of gasoline. One might assume that the cost of a barrel of oil is the price to extract it from the ground, plus a reasonable profit. That is only the beginning. Each step in oil production adds to the oil price, including exploration, drilling, pumping, transportation, refining, and distribution. Gasoline can be considered a miracle liquid, because one gallon can safely propel a two-ton car 20 or 30 miles. However, when the price of oil suddenly doubles or triples, consumers can no longer take the price of oil for granted.

The effect of crude oil barrel prices shows up in unexpected places. Increased oil costs often mean an increase in the cost of consumer goods. How are fruits and vegetables connected to the price of oil? The shipping company charges more for seeds because his trucks have higher gasoline bills. The farmer pays more to run his tractors and combines. Once again the shipping company charges more to take the crop to market because of the higher oil price. Finally, the market gets charged more for the crop, and increases the price charged to the consumer. Oil price increases seem to take money from everyone involved.

Manufacturing facilities, especially those that use crude oil in production, are affected by oil costs. Pharmaceutical companies, plastic manufacturers, and auto makers all have their costs increase as the price of oil increases. They offset that loss, however, by raising the prices on their products. Companies do that in order to continue making a profit. In the end, it really is the consumer that bears the burden of higher and higher oil prices.

Mayoor Patel is the writer for the website http://oil-prices.oil-universe.com/. Please visit for information on all things concerned with Oil Prices

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