Does a drop in crude mean relief at the pump???
With oil prices'dropping by $4.00 at the close of day yesterday it has many people wondering if it will have an immediate impact on the high cost of auto fuel. Sadly the answer is no, and although people are weary of outrageous gas prices there is no real end in sight. There are far too many factors that work against consumers seeing any significant drop in price at the pumps.
The first and foremost issue being that although the price of auto fuel has increased on the flip side the demand has not decreased. In the US the summer months of May through August are often the most traveled and with the economy still unstable as it is many families are still opting to vacation close to home. This leads to an increase in gasoline consumption and offsets any decrease due to a drop in oil prices. As the summer months wind down the cooler temperatures set in and so begins the increased demand for home heating fuel.
Additionally, irrational speculations by investors as well as the unsettled situations in Middle East countries like Libya have not helped to bring the cost of oil down until recently. While Libya is only responsible for approximately 2% of the world’s oil exports when a country is at war with no end in sight it drives the prices up. To counter the loss of these exports OPEC has increased its production by about 60 million barrels a day to accommodate the demand and therefore has helped to drive costs of crude down.
The future of oil dependency does look hopeful though. Advances in technologies like hybrid vehicles and alternative fuel options have slightly decreased the need for oil, however until these advances are widely used and accepted the world’s dependence and use will remain at or slightly above the current levels. While it is unlikely that the global population will ever be oil free, reducing the need for it will good for both the environment and the wallet. Oil is not the evil that it is portrayed as by many economists and environmentalists. The truth is the excessive consumption is really the problem and until people can figure out how to effectively use alternative fuels, this vicious cycle is bound to continue.
Similar Posts:
Marketing Your Business With Facebook PPC Ads : Chances are if…
Marketing strategy and its requirement : Like the battle…
3 Key Factors Affecting Foreign Rates : 1. Interest rates….
Home equity release-a good option? : Currently many old people…
Comments are closed!