Causes of High Fuel Prices

 Rich or destitute, the mounting fuel price is causing an appalling blinking to the world economies across the globe. It was year 2008 gone the fuel prices hiked occurring drastically and ends happening gone a folder high of $150 per barrel. We are yet observing the gradual build up in the fuel prices across the globe. Basically the supply and demand for the unrefined or clumsy oil is the major cause for tall costs of fuel. Supply and demand is the basic criterion for every single one simulation prices.

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Worldwide Oil Supply

According to U.S Department of Energy there are three cut off simulation estimates of the world's known oil reserves. The average of these reserves is estimated to be 1,255billion barrels. Saudi Arabia as a dominant producer holds 256billion barrels of reserves. 755 billion barrels merge the Middle East.

The Organization of Petroleum Exporting Countries (OPEC) is the connection of 12 countries, which is led by Saudi Arabia. OPEC accounts for 2/3 (66.66%) of the world's oil reserves. OPEC as a look leader feels pardon to set its own price for unprofessional oil. Therefore no considerable competition to goal downs the prices.

Worldwide Oil Demand

Demand for fuel and fuel prices are in talk to proportion to each totaling. It means that whenever the demand of the petroleum products increases, the prices of the fuel for consumer accumulation. It is estimated that the daily global request for petroleum is round more or less 85-90 million barrels.

Economical and Geographical Effects as regards Politics (Geopolitics)

There are as a result many factors, which disrupt the supply of the fuel, repercussion in the amassing in the demand and therefore the prices shoot occurring. Military operations or subsidiary disputes in the midst of oscillate countries are the big hindrance in the continuous supply of the fuel. For instance, Israeli military measures into the Middle East, disorder acts in Nigeria etc.

Impact of natural disasters upon fuel prices cannot be denied. As we can offer a favorable confession the example 2005 Hurricane Katrina in America resulted in 40cents overnight bump in the fuel prices. Several offshore oil piers and Gulf Coast refineries deeply damaged and shut the length of in result of Hurricane Katrina for several months.

As a Financial Asset

Energy markets have emerged as a sudden trading platform in recent years. Hence, more the larger bank larger is their commodity trading desks. Most of the investors nowadays have moved into the expose to trade highly developed pacts upon oil prices. Even banks have developed.

Moreover, in most of the countries the fuel price is cited in terms of U.S dollars, i.e. exporters allegation in the estrange along prices to reimburse for the devalued currency, considering the dollar is feeble neighboring-door to adjunct global currencies.