The supply and demand for the unrefined or crude oil is the major cause for high costs of fuel. Supply and demand is the basic criterion for all energy prices. According to U.S Department of Energy there are three separate energy estimates of the world s known oil reserves. The average of these reserves is estimated to be 1,255 billion barrels.

Saudi Arabia as a dominant producer holds 256billion barrels of reserves. 755 billion barrels belong to the Middle East. The Organization of Petroleum Exporting Countries (OPEC) is the association 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 market leader feels free to set its own price for crude oil. Therefore no considerable competition to drive downs the prices.
Demand for fuel and fuel prices are in direct proportion to each other. It means that whenever the demand of the petroleum products increases, the prices of the fuel for consumer increase. It is estimated that the daily global demand for petroleum is round about 85-90 million barrels.

There are so many factors, which disrupt the supply of the fuel, result in the increase in the demand and hence the prices shoot up. Military operations or other disputes between different countries are the big hindrance in the continuous supply of the fuel. For instance, Israeli military activities into the Middle East, rebellion acts in Nigeria etc.


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