About Oil Prices

Wilma Flower asked:


Nearly everyone is affected by the rise and fall in oil prices. For most people, this has a direct affect on their lives. When oil prices go up, the price of gasoline usually follows and that causes people to drive less (when they can help it) and people start to get a little anxious that something new might come out of the conflit in the middle east. Then, when oil prices go back down, gasoline prices tend to fall a bit and people get happy. They start driving more and spending more money (since they have more money now that gas is cheaper) and the economy starts to do better. Some people even buy new cars. And this pattern tends to repeat itself.

The price of oil is generally related to supply and demand. As new technology calls for more and more oil, the suppliers will raise their price as a natural reaction.

Today, the resources are available to most people to potentially profit from this rise and fall in oil prices. Online futures and stock trading brokerages will allow you to trade crude oil futures and stock oil ETFs (exchange traded funds) easily over the internet.

Imagine seeing gas prices go up and your neighbors getting angry and complaining that it now costs them $60 to fill up their tank. But on the inside, you are secretly smiling because you own a portfolio with an oil ETF in it and you know that as long as oil prices keep going up, your account size is growing.

The easiest way to get started trading oil is to trade the exchange traded fund with the ticker symbol USO. It’s available at any stock brokerage, whether it’s the guy at your bank or at the deep discount online brokerage. Just remember, do your economic homework, buy low, and sell high! Good luck!



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vert.grimble asked:


Will oil price spike after the meeting (assuming big production cuts) or has it already hit a high in anticipation?

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Irascible Interlocutor asked:


He want’s to end the war in Iraq and negotiate with Iran. Will this be helpful in reducing the cost of oil?

Despite all the recent talk of soaring prices at the pump, political and economic pundits rarely mention the impact of war and political instability in the Middle East on the skyrocketing price of oil. There is strong evidence, however, that the heightened price of energy is a direct consequence of the destabilizing wars and geopolitical insecurity in the region. These include not only the raging wars in Iraq and Afghanistan, but also the threat of a looming war against Iran. The record of soaring oil prices shows that anytime there is a renewed U.S. military threat against Iran, fuel prices move up several notches.

Not long ago the price of oil was about a quarter of what it is today. But soon after the invasions of Afghanistan and Iraq the price of oil began to escalate in tandem with the escalation of war and political turbulence in the Middle East. The fact that the rise in the price of oil has followed the heightened insecurity in oil markets is neither accidental nor a simple correlation; it represents a causality that runs from the heightened insecurity in oil markets to the inflated price of energy.

The war also contributes to the escalation of fuel cost in indirect ways; for example, by plunging the U.S. ever deeper into debt and depreciating the dollar. As oil is priced largely in U.S. dollars, oil exporting countries ask for more dollars per barrel of oil as the dollar loses value.

Not only are the raging wars in the Middle East responsible for energy price inflation, they are also responsible for price inflation of many other commodities, especially grains and other foodstuff, whose production and transportation depend on fuel.

According to the World Bank, food prices have more than doubled over the past three years. The price of rice, the staple for billions of Asians, is up 147% over the past year alone. The mounting food prices have caused hunger and deadly violence in many countries, including Haiti, Egypt, Thailand, Indonesia, Senegal, and Malaysia.

This shows that the disastrous consequences of U.S. wars of choice go beyond Iraq, Afghanistan, and the United States. The skyrocketing costs of fuel and food tend to plunge many of the world economies into a 1970s-style stagflation (a combination of stagnation and inflation) that threatens many lives and/or livelihoods around the globe.

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