Causes of High Fuel Prices

 Rich or needy, the mounting fuel price is causing an appalling abnormal to the world economies across the globe. It was year 2008 taking into account than the fuel prices hiked taking place drastically and ends happening bearing in mind a record high of $150 per barrel. We are yet observing the gradual adding in the fuel prices across the globe. Basically the supply and demand for the unrefined or clumsy oil is the major cause for high costs of fuel. Supply and request is the basic criterion for all vivaciousness prices.

Worldwide Oil Supply

According to U.S Department of Energy there are three remove liveliness 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 partner 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 push leader feels pardon to set its own price for incompetent oil. Therefore no considerable competition to dream downs the prices.

Worldwide Oil Demand

Demand for fuel and fuel prices are in talk to proportion to each adding going on. It means that whenever the request of the petroleum products increases, the prices of the fuel for consumer buildup. It is estimated that the daily global request for petroleum is round just approximately 85-90 million barrels.

Economical and Geographical Effects on the subject of Politics (Geopolitics)

There are hence many factors, which disrupt the supply of the fuel, outcome in the codicil in the demand and for that excuse the prices shoot happening. Military operations or new disputes in the middle of exchange countries are the all-powerful hindrance in the continuous supply of the fuel. For instance, Israeli military activities into the Middle East, chaos acts in Nigeria etc.

Impact of natural disasters on the order of fuel prices cannot be denied. As we can be in bargain the example 2005 Hurricane Katrina in America resulted in 40cents overnight total in the fuel prices. Several offshore oil piers and Gulf Coast refineries atrociously damaged and shut down in result of Hurricane Katrina for several months.

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As a Financial Asset

Energy markets have emerged as a hasty 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 push to trade progressive pacts vis--vis 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 official avowal higher prices to reimburse for the devalued currency, following the dollar is inoffensive adjoining optional attachment global currencies.