Earth Charter Chicago

Why is Oil So Volatile and Expensive?

Have you ever noticed the gas station that oil prices have become so unpredictable, you never know what price it will in the coming weeks? It’s just over a year, when the price of a barrel of oil on the futures market over $ 100. Now, the price of oil hovering around $ 70.

Here are some reasons why oil prices are volatile:

1. More oil from volatile and unstable countries. Venezuela offers a lot of oil in the United States. In recent years, the Government of Venezuela for the private oil industry has been transferred and thus controlling the amount of oil in the world. When Venuzuala government is not satisfied with a policy of its neighbors, it can reduce the supply of oil in this country.

2. In recent months, investment at the expense of finding new oil fields by the rapid decline in oil prices. Therefore, if there is an increase in oil demand in the future, oil companies do not have enough oil and lead to higher prices.

3. The recession reduced demand for oil. In these difficult times, consumers are not ready to drive his car than to have them. They are only with cars when they go to work or receive food from the supermarket.

4. Investments in alternative energy, oil prices did not predictable. Most countries now focus on reducing their need for oil and alternative energies such as solar.