How has historical events pushed up the market prices of petrol?

Question

How has historical events pushed up the market prices of petrol?

Answer 1

For one, there is now a lot of demand from developing countries like India and China.  At the same time, we have already gotten much of the "easy" oil, and additional finds are more difficult and expensive to drill.

Right now, our world is enturbulated and this is as much if not more so in the oil producing countries.  There is a war in Iraq, which has one of the world's largest oil reserves, a Socialist regime in Venezuela, war in the Caucusus (where there is a strategic pipeline) and talk of Iran developing nuclear weapons.  The Israelis are publicly contemplating bombing Iran and that does not help the price of petrol.

Answer 2

Finance students look at the word "historical" a little differently.

When oil was $30 a barrel, the demand was high, and they could sell all they wanted to. If consumers think the price of a good is too high for its perceived benefit, they will decrease their consumption, or find a substitute.

In the 90s. the regulations on petroleum products were all but wiped out, and cartels arose. The price of oil went up because everyone plans for inflation, and the consumer was not suffering yet. Gas went from 1.24 a gallon to 3.00 a gallon overnight in the turn of the century,Consumers don't believe that price is a good return for their investment, so we started using less gas, finding alternatives, buying smaller cars.

Now the price and demand curves don't cross at what is called an "equilibrium point" anymore. Cost keeps rising although demand is not. If you price a product correctly, you can tweek out a little extra profit without alienating your consumers. The oil barons didn't take economics 101, or finance. For no reason, the price continues to grow, but the demand is decreasing. That is bad economics.

They'll either have to lower their prices or live with decreased demands, and decreasing profits. Even in the last month, our 8% decrease in gas/petroleum product has lowered the price of gas back into the $3-something range.

It happened in the auto industry, too. They kept raising prices without offering more benefit for the bucks, and consumers stopped buying,

You can't break the laws of economics!