jwishz
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Simple question...not so simple answer. There are three major factors causing crude to be as expensive as it is.
First: Supply and demand. Statistics indicate that demand is high, particularly in developing economies such as China and India. Growing demand + limited supply = higher prices.
Second: Speculation: Crude oil prices are established by the producers, OPEC and others. Speculative traders around the world bid up the price of oil based upon world events such as storms, unrest in the middle east, refinery shutdowns. Perceived risk increases prices.
Third: Devaluation of the US Dollar. All crude oil is paid for in US Dollars. In recent years the US Dollar has been devalued when compared to most all of the world's major currencies. So, if an oil producer was selling crude at $50/bbl when the dollar was stronger, and now the US dollar is worth 40% less, the producer would have to recive 40% more to maintain purchasing power. Assuming a 40% reduction in value as an example, the $50 is now worth only $30.
Clearly, there are other reasons impacting the price of crude but I believe these to be the 3 major reasons.
Hope this explanation helps. |
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Ahmed I
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Oil is a limited resource, and it is running out. We get most of it by drilling into the ground, but the supplies are far from inexhaustible.
A limited supply and a high demand equals a high cost (this is basic Keynesian economics) |
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Steve B
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China is willing to pay $100 to get as much as they like at that price .. we have to make do with whatever is left over.
Thus, it's simple supply & demand. |
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Stacy
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umm im guessing
theres a lot of demand, but the oil is limited..
so its more expensive?
but its not that expensive where i live - 20 dollars a barrel :)! lol i would die if i had to pay 100 dollars for a barrel! |
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Ian M
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We have already used over half the known oil reserves on the planet. The next generation or two is likely to see it run out entirely (mostly used by Americans) |
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Daniel I
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because there isnt enough of it to go around |
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Spock (rhp)
 |
bob ... the reason for that is that America stopped all major energy production programs about 1980.
we literally built out the ones then already underway and abandoned any more.
demand world-wide is up strongly. production isn't. We aren't helping on the production front. so it costs ever more.
get used to it. |
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Matthew O
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"Expensive" is a relative term. I find oil to be cheap, very cheap. When in the history of mankind has transportation been as affordable, easy, speedy and convenient as it is now? The answer is "Never!"
Anyway, oil is very desirable, of course. There is a great demand for it. There is a limited supply -- voila! That's why oil is "so expensive." (This is not "Keynsian" economics, by the way, it's just simple economics.) More and more people want more and more oil -- and we all have more and more money and are more and more willing to pay it to get oil.
Not really a mystery here. |
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Barbarian
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Because reserves are running out |
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Viñas
 |
Ask Bush |
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shorty_frm_ga
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George W. Bush...jus send him a letter and say charge the easterners $100 for a barrel of grain if they charge that for a barrel of oil... |
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Just Suspend Me
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Pretty constant supply with a very increasing demand...we better hope we start getting some serious alternate energy uses in teh next 5 or 10 years or will see $200 a barrel oil real quick...china and india are requiring vast new oil usage. |
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Beef39
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World demand for oil has shot way up over the last decade as countries like India and China industrialize. While we have vast oil reserves in this country, the environmentalists/Democrats do everything possible to ensure that we don't tap into our own resources. It's simple economics. World supply of oil has increased little but demand is way up. Therefore, prices rise. Blame the Democrats...seriously. |
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[.miaa.]
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Because the gas stations know you have to buy it..So they put it as high as they can! |
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David D
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Oil is a limited resource, and it is running out. We get most of it by drilling into the ground, but the supplies are far from inexhaustible.
A limited supply and a high demand equals a high cost (this is basic Keynesian economics) |
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kinkon
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because we have stupid polititians oops!
it is not expensive it is our salary to low;
1 |
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Johnny rotten
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So they can make money out of us |
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Stinkbug B
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Many Arab Nations have massive Building Projects going on and Hugo Chavez gives away free oil to Cuba and other South American countries, so we have to pay for the differences |
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CHRIS G
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Coz the f****in Arabs have got the world to ransom !! |
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dude
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Bush is in the oil "bidness".
What did you think would happen. |
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☼Rob☼
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owing to INSANELY SHAMELESS profiteering by the Oil companies and NOTHING ELSE.... |
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Don G
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bill clinton did it |
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discuss? fookid93@aim.com
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because forighn counties are anus-faces |
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Braqs
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its not oil. Its Piss |
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