What Can be Caused by Rising Oil Prices - Essay Example

The Influence caused by the Rising Oil Prices Thesis ment The relation of inflation within a society with the ever changing oil prices is prettymuch significant and one must understand that there is a strong bond present between the two. This strong linkage allows for prices to shoot up whenever there is a sudden upward trend experienced in the oil prices and whenever the gold rates have increased on the global front. The recent trades however have seemed to have a dialogue with the skies. Introduction It is a common phenomenon the world over that the oil prices have impacted the basis of economies and have been able to bring about changes at the top when the masses have come out in the streets and raised their voice against the discriminatory effects that the oil prices seem to have on their lives. The worst possible explanation given by experts in the field of oil prices’ regimes is that these are done to benefit the people in the long run – the long term which seems to be a far fetched proposition, one which has never been seen and would eventually cease to exist. (Sherman, 2008) It is a harsh reality that these prices would continue to increase every now and then and there would hardly be any subsidy or chances of these prices coming down since the world’s inflation rate and that of the respective countries is also increasing, with exceptions here and there but on the whole there is much pessimism that surrounds the whole related equation. Price Issues There needs to be certain price levels with regards to oil since it has a huge impact on the economy of a particular nation. The same could be looked in a totally different perspective, one that can be remarked as being positive by one set of people while being a sure case of treason as negativity attached with it would spark a fierce reaction from the other lot. This could be a sensible solution nonetheless as it would solve the misery of increasing the oil prices every now and then, once and for all. However, this does not hold much of a ground. Reason being that the same has been exercised very well in the past without much success and is sure to be a worse case scenario again in the present times, as a number of people have already thought it to be one of the very same. (Tannenbaum, 2008) The rising price issues need to be tackled in such a way that the $148 a barrel price never comes back to such exorbitant levels – levels that have haunted people like no other issue in the recent past. It has made a drastic difference within their lives and they have started to panic all of a sudden. Limited Resources at Disposal A number of people are of the view that the prices of late have been set by the limited resources and those people who are at the helm of affairs should just do something else rather than ruling their lives with changing oil prices every now and then. They are of the view that the OPEC oil embargoes have done much damage to their lives already that they cannot sustain anymore in the aftermath of the Iraq war and the Afghanistan saga and not to forget the Iran Nuclear threat that poses as a hanging sword on a constant basis. However, on nearly all grounds, these people seem to blame the lawmakers concerning their shortcoming in this very field as they have been the ones to fall short of the desired expectations of the people and now these only are the ones who are on the receiving end than anyone else. (Holland, 2008) Different economies have literally been stunned due to the effects that happened when the oil prices shot up to $148 a barrel some 20 days back. Several nations have also lost a lot of ground since the world oil prices skyrocketed to immense proportions. However the present rate of $120 approximately is a sign of relief for the policymakers as well as the people who bear the direct or indirect brunt of rising oil prices, all over the world. Nearly all commodities have increased in their respective prices and basic commodities have become so expensive that it is out of the reach of common man and woman on the street. Availability of the Price Control Mechanism A serious note of late has been made of the absence of a price control mechanism in place as it would have set a somewhat less price increase within the world. However one thing needs to be considered and that is the fact that oil prices throughout the world have been shown to shift the very basis of the economy in which they are altered and it is pretty natural that the countries are made to pay for these changes every now and then. (Author Unknown, 2008) The world crude oil prices are on the rise and this indeed affects each one of us since there has to be a balancing act somewhere or the other and the unfortunate part is that the balancing act comes out more vivid and clear when it is set on the common man and woman who is working his or her heart out day in day out, just to meet the shifts in oil prices throughout the world. There is a sense of discrimination and unfair regime looming large on these types of people who have nothing to do with the changing oil prices yet their lives are pretty much made to be at the receiving end since the oil prices have inverse effects on their respective lives and there is no way out of this very situation so to speak. The Gulf Situation The decrease in oil supply due to war like situations in Iraq and Afghanistan is another reason why the prices of oil have increased over the last one year or so and this would continue to be the case in the coming times since the United States and allied forces have decided to put their respective armies for extended period of time within the region. The war like situation will present problems for just about everyone when it comes to the increasing oil prices. Thus supply and demand aspect needs to be considered as well when one speaks of the ever fluctuating oil prices in the world markets. If the demand is more than the supply then it is a known fact that the prices would be lower as compared to the issue of supply being more than the demand itself, which hardly ever is the case. (Siddiqi, 2008) The Root Causes One must also consider the root causes which actually add up to the increasing aspect of these oil prices in the last year or so. The same is all the more necessary to understand since there are problems looming large when there is such a huge demand and supply aspect in front of us. Obviously the labors can go on strikes and demand higher wages or the channel members can cease to give in their services if they think they are being treated in a discriminating fashion. Then there could be certain factors which are pretty personal in nature or ethnic in origin. The wars that are going on the world over are another reason why the oil prices can increase every now and then. Hence there could be a number of reasons as to why these prices have considerably increased in less than 12 months and what one can do to get off with the said regimes in place. The fires and terrorist strikes at oil refineries and the offices of these refineries, labor strikes and government bans that usually happen from time to time are some of the few aspects that could mar the whole regime of progress and development when one speaks of the ever changing oil prices in the global context. One must also understand the fact that certain problems do arise from time to time in different economies coming under the influence of the pressure groups, governmental bodies and factions which could literally shake the very basis of a consistent demand and supply regime in a country and for that matter, within the whole world. (Author Unknown, 2008) Current and Recent Trends As far as the recent changes are concerned within the oil prices around the world, we find out that there was witnessed an increase in the oil prices in December last year and has continued till the end of July after which it continued to come down to around $120 a barrel. The same was around $50 a barrel some 12 months back. Within a period of eleven days, the price shot up to $55.46 a barrel which by all accounts was a significant change. However the same came down to $53.32 in the span of a month and then increased again to an all time high and closed at $58.28 a barrel. Moving on the barrel rates touched $60. After this, there were increases seen time and again and it all came to a standstill at around $148 after which the decline has started to come. Those who study these figures on and off exclaimed that these indeed were the highest rates that were touched by crude oil. Never before has there been such a situation. The reason for the same increase was laid on a number of different issues, one being Iraq’s friction that it had with the West as well as Afghanistan’s Taliban regime. (Author Unknown, 2008) The element of terrorism poses as the biggest threat to these fluctuating oil prices. There were the impending attacks which are envisaged by just about everyone on Iran by the United States army and hence the rates shot up immensely. Conclusion In the end, one needs to understand that the outbreaks of these increases are something which must be studied in the proper perspectives since the issue of increase in oil prices is not limited to a particular nation but the same takes care of the global context which makes it all the more significant. Of course, there are controversies everywhere when one speaks of the increase in the oil prices and these will continue to be such in the coming times ahead. (Wray, 2008) The effects of the escalating oil prices are pertinent to the very basis of a country’s economy and hence the law makers and the government functions must enact all possible laws to counter the increases which usually happen every now and then and present to the general public the true picture. Bibliography AUTHOR UNKNOWN. (2008). Soaring Oil Prices Push Diesel near [Pounds Sterling]6 a Gallon. The Daily Mail (London, England), May 21 AUTHOR UNKNOWN. (2008). The Big Feature: Soaring Oil Prices Fuel Industry Fears; IN ASSOCIATION WITH Rensburg Sheppards Predictions of Pounds 6 a Gallon for Petrol Will Hit Some Businesses Very Hard. Daily Post (Liverpool, England), May 14 AUTHOR UNKNOWN. (2008). US Crude Oil Prices Fuel a Record Mark-Up at British Pumps. Daily Post (Liverpool, England), January 4 AUTHOR UNKNOWN. (2008). Energy Stocks Surge as Price of Oil Spurts Again. The Evening Standard (London, England), May 21 AUTHOR UNKNOWN. (2008). 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