Why Does The Price Of Petrol Keep Going Up?

First part that needs to be realized is that the petrol for vehicles is only accounts

for about twenty percent of the crude oil production; the rest is used for other manufacturing processes.

The crude oil prices are supposed to be determined by supply and demand, that is the nature of capitalism, however much of the price of crude is control by commodities options. These are when the traders buy oil in the future at a pre-set price, if they think the price will be at a certain point then that is what they bid on it. They determine that price by what they think the demand will be and what they believe the supply will be.

They take into account conflicts in certain areas or involving certain countries. If the UK for example is going to send in a large number of troops to a conflict area, they know that the UK is going to require large amounts of fuel for their vehicles planes and even generators. This then is going to increase the demand on the reserves and therefore the price of crude will increase. Likewise countries such as China are starting to increase their demands for crude oil and this too causes an increase the price.

Likewise seasonal demands also change, in the summer with vacations and day trips, the demand for petrol increases and therefore the prices increase. The supply and demand is no longer just a local situation but a global one. Governments can control the price of petrol to some extent by use of the VAT and other taxes however it is now a global demand that impacts the price to a greater extent. Even if the demand for Petrol were to decrease the demand for crude oil would probably not decrease that much. Many of the products that we use on a daily basis require oil products or by-products for their manufacture and these items are now so ingrained in our society that it would be very difficult to be without them.

Why is the Price of Petrol increasing, because it is an off shoot of the demand our society has placed for all the products derived from crude oil. Petrol prices could come down, but other products would then increase, and that's not taking into account the revenue that taxes such as the VAT generate and allow the governments to put back into social and educational programs.

by: kevin

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