what drives the price of oil and particularly gasoline up and up? (Referring to economics)If oil reserves seem to be about the same now as they were in the 1950's, what drives the price of oil %26amp;gas up?
Oil reserves are not the same now as they were in the 1950s, demand and use have gone up by multiples and we have depleted quite a lot.
I don't know how much we have depleted, but it's safe to say there are a few decades of oil left. That doesn't mean it will be there at the price we have today, companies will have to work harder to develop remaining reserves and extract oil from harder to reach areas. Oil is driven up by by several factors, current demand, supply disruptions, all integrated into the commodity market of oil.
When people buy and sell units of paper representing oil in the future, they are betting it will go up or down, to hedge or sell short. Supply disruptions will make oil more expensive, and more bidders will drive up the price in addition to an actual increase in demand.
I guess a simple way to put it is, part psychology and part actual demand/supply.If oil reserves seem to be about the same now as they were in the 1950's, what drives the price of oil %26amp;gas up?
1. Decline of the US dollar, caused by inflation and overprinting of money by the Federal Reserve. Investors do not want to hang onto a declining dollar so instead they invest in commodities (oil, gold, silver, copper) or foreign currency (Euro).
2. Oil consumption worldwide is up greatly. Equal reserves as 1950 but 300% higher consumption. Simple economics, if supply is constant and demand goes up, so does price.
3. New environmental and safety legislation. In the 1950s, companies could get away with environmental and personell destruction. Now they have to invest billions in technology to meet air, water and solid waste regulations and to keep their employees and communities safe.
4. Increase taxes. Governments have increased fuel taxes, oil extraction taxes, property taxes, and fees to purchase drilling rights.
5. Transportation. In the 1950s, the USA was capable of producing its own oil. Now it has to transport oil from other countries, often countries located thousands of miles away. Ships and pipelines add to the cost of production.
6. Lower quality oil. We have used up most of the light sweet crude that is easy to transform into gasoline. Remaining reserves are now heavy sour crude that is expensive to refine into gasoline, and which yields less gasoline per barrel processed. With lower yield, supply is further constricted
7. Existence of a government-sanctioned monopoly (OPEC) that is determined to raise prices. And a US government that is happy to play along with OPEC.
Supply and demand.
I know, you're thinking, we have about the same oil reserves as we did then, so supply is the same. Think again. OPEC got together most of the oil producing states and cut production of oil. We may have the same amount of discovered oil in the ground, but not nearly as much of it is being pumped out.
Furthermore, demand has increased. We have more people in the world today. That's more people driving cars, some of them dumb enough to heat their homes with heating oil, more people buying plastics made from resin which comes form oil, etc.
Supply has gone down, demand has gone up. So the price goes up.
Well... if you assume supply is the same, and price has gone up...
Probably it means demand has gone up. That holds up when you consider the number of cars/planes/ships in the world today compared to the 1950's.
Obviously it's a bit more complicated than that, but I'm assuming this is a hypothetical question for an economics class.
supply is the same, but demand has gone up.
that means that price goes up as well. It will keep going up as long as people are willing to pay for it as well, when people are no longer willing to pay (demand is down), then the supply will go up (because not as much is being bought), and then prices will go down.
prices usually follow ';supply and demand.';
That would be the last years of no new oil refineries being built in the united states. The refineries determine the price at the pump and it is a sham owned by the REPUBLICANS. That is business 101.. This is the real truth. Just google oil refineries and find out how many we have built in the last 8 years. We had no money or time to do it because Bush was in Iraq, Afghanistan and Louisiana trying to fix all his problems. No joke.
Additional taxes. And while we know where the oil reserves are unlike in the 50's where you found oil and then drilled in America. Now you can spend millions for the rights to look for oil in the US but you are not allowed to drill.
the government, and the companies that have a monopoly over the oil/gas intake. together they get to control the prices and the flow of oil and gas
OPEC decides that they would like more money so they store more oil rather than sell it. With less oil on the market it becomes more expensive which causes oil companies to raise the price to make a profit.
All the state, local and federal taxes that are tacked onto the price of a gallon of gas. Like road taxes, wheel tax.... And the list goes on.
The Organization of the Petroleum Exporting Countries (OPEC). Which did not exisit in the 1950s
Unbridled greed, enabled by unregulated speculation, thanks the Commodity Futures Modernization Act, compliments of Phil Gramm %26amp; the Republican Party.
I recently read that the production and storage of oil here in USA actually either raises or lowers the price. Not the arab republics like most believe.
Supply and demand, regulations on what type of mixture for summer and winter, taxes, lack of refineries to produce more and OPEC
Greed, profit, people's willingness to PAY for it, and government's failure to do anything to lower demand.
to even out the economy, if having an employee cost more then your gas is gonna be mor espensive
so on, with everything
Alarmism. Environmentalists. And sure, Greed.
Decreases in he amount of oil produced or the supply and/or increases in demand..
Oil speculators %26amp; it should not be allowed.
they are not, even so a dollar today does not equal a dollar then
Supply and demand, same as always.
Speculators in the oil market . Trying to make a quick million bucks like they did 2 years ago.
For one there are many times more people driving today than there were in the 50s.
Bourgeoisie.
DEMAND
inflation I'm sure has a lot to do with it. A dollar isn't worth jack anymore.
One word: DEMAND!
greed
So much for, ';The free market is self regulating.'; LOL what a bunch of BS.
Yeah...';if';.
Where did you get that gem?
because on hoidays they llok at there calendars and think hey lets screw the american people today!
