Why the oil price is very high today ?

Answer 1

because people are willing to pay it. Stop buying Gas and the price will go down. right now people are buying more Gas than anytime in history.

Answer 2

1) The use of oil (DEMAND) has risen dramatically--most especially in China (as China has moved from an agrarian society to an urban society). The use of automobiles in China has grown exponentially and demand for fuel to power their economic growth has been dramatic. The same goes for the economy of INDIA. The growth of these nations in the past 5 years has been tremendous.

2) Political strife: there are constant disruptions in the supply chain. Nigeria sees constant problems. Iraq is not producing what it formerly did. Russia nationalized its oil companies. Thirld world nations are now using their oil resources as political tools. And Saudi Arabia just doesn't have the goods anymore. The "easy" oil is gone.

3) Mid-East strife: puts a premium on the price of the commodity. The Iran nuclear ambitions, Israel's "war" with Hezbollah and Hamas (with Syrai and Iran in the wings) mean that the Mid-East and its oil could "flash" at any moment. That leaves Venezuela and Russia and Nigeria, which are all nettlesome areas also.

Inflation adjusted, the price of oil is about where it was 25-30 years ago. This why it has not disrupted the economy too severely.

Heart of the problem is that there is less and les of it and the demand is greater and greater.

We keep driving great big SUVs...

If the US had invested 300 billion in hydrogen fuel cell technology instead of pissing it away in Iraq, we wouldn't have to keep going over to the Middle-East and kissing their asses or killing them for oil. Hydrogen fuel cells leave water as waste rather than hydro-carbons.

Answer 3

Oil has two very peculiar things about it, (1) it is highly capital intensive (development and especially refining require significant cash outlays), and (2) it is storable (i.e., not perishable). The former ensures that supply's reaction time to changes in demand is going to be long (suppliers want to make sure that prices are likely to remain high for a long time before they commit to expanding development efforts and refinery capacity). The latter enables stockpiling by speculators and governments. The end result result is volatile prices and long inventory cycles.

For a more comprehensive treatment of the subject, see:

Fridrik M. Baldursson, "Modelling the price of industrial commodities," Economic Modelling, Volume 16, Issue 3, 3 August 1999, Pages 331-353.

Answer 4

Because the oil companies can charge whatever they want and we have to pay it.I don't think the war has much to do with it.However it may just be a coincidence that oil prices are at an all time high and so are oil company profits.

Answer 5

The war n iraq has a lot to do with it as neighbouring countries (such as Iran) that also have the capacity to produce a lot of oil are unreliable to the western world.

OPEC is a monopolising company that is made up of 11 countries, they also contribute to the high oil prices as they keep the quantity of oil they realese to low levels. Keeping the quantities low lets them get a higher price


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Answer 6

Very simply, because of the uncertainty due to the continuing war and political issues in the oil producing regions of the world. There are tensions between the US and Venezuela, the ongoing wars in Iraq and Afghanistan, plus tensions between the US, Europe, and Iran.

Answer 7

I think it is very high mainly because of the surge in demand of oil in China and India. You can find interesting articles about the price of oil in Hamilton's blog (http://www.econbrowser.com/archives/energy/index.html). He is professor of economics in the University of California, San Diego.

Answer 8

1. because some arab nations want more money to fund the terrorists.
2. because the democrats and some spineless(read moderate) republicans will not allow drilling in many areas(read sacred and holy peta/sierra club worshipping ground)
3. the government has so mangled the process for building new oil refineries that its not cost effect or even possible to do it.

Answer 9

Let's see.... The oil companies have declared record profits, in the billions since George Bush has been in charge of this country. Draw your own conclusions.

Answer 10

The war in Iraq.