Thursday, April 14, 2011

Multiple Reasons Behind The Oil Price Rise

By Jack Wogan


Oil can be found in special reservoirs, which must meet several conditions. These reservoirs consist of a source rock which needs to be buried deep enough to allow the subterranean heat to cook it into oil, then a porous and permeable rock for the oil to accumulate in and a cap rock that prevents oil from escaping to the surface. Because of the water that flows in the underground, oil might deviate from the main road and it will be hard to be trapped in a reservoir. Therefore special extraction procedures are needed. The most known oil producing countries are Saudi Arabia, Russia and the United States, but we can also find oil in Canada, Venezuela and the Middle East.

In present some analysts believe that the strong oil prices could raise inflationary concerns, especially in these times of economic hardship. As a result of the present oil situation, the price of gasoline and other refined products has increased. As for rates, credit cards, car loans and mortgages, these will also become more expensive.

As countries develop, the demand for certain goods is growing. The best example in this regard is the high consumption of oil in countries like China and India, where the economy is in constant development. While in China price inflation tends to reduce the demand from other countries, India's oil imports are expected to triple in the following years. Another factor which contributed to the rise of oil prices is related to the presence of hurricanes in the Gulf of Mexico, destroying the existing oil wells.

Oil corporations from Niger Delta, Nigeria are seriously affected by some internal conflicts that are also threatening the community life. Due to oil environmental pollution, farming and fishing become impossible in oil-affected areas and the most serious problem is water infestation, which leads to undernourishment and disease among the locals. This fact also contributed to the rise in oil prices, as is the case with dollar's weakness.

Today, the world supply of oil depends on how large the demand is and this is one of the most important reason of the increase in prices. There are countries that benefit from this particular growth, but unfortunately this is not a general matter. Analysts believe that the situation would change in case of a world economic recession and the stability in the price of oil will restore the economic situation.

Gold investment will always be a good strategy in times of economic crisis, or other factors. As the dollar falls and oil prices are rising, gold will inevitably rise. That is why it is time for you to make an investment and to take advantage of its benefits. You can choose to invest in gold coins, or bars, because this method is both safe and profitable and you can purchase this gold from gold dealers, coin dealers, private individuals, or from the mint that produced it.




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