Petrol: What Affects its Price


The Importance of Petrol

Petrol prices are important to any commuter. The price of petrol affects everything from your bus fare to your airfare. The production of goods and rendering of services are also affected by petrol prices, so it’s important to understand just what it is that determines the price of petrol. With petrol, the cause cannot be easily pinned down, as there are multiple factors that contribute to the price of petrol.

What affects Petrol Prices

Petrol prices are directly linked to the prices of crude oil, so understanding petrol prices means understanding what affects the price of crude oil. Like with petrol, this isn’t simply linked to one thing.

Supply and Demand

As with every commodity, the price of crude oil is largely based on supply and demand. Simply put, the more there is, the less people would be willing to pay, and the less there is, the more people would be willing to pay. Oversaturating the market with crude oil then would lead to cheap prices.

Availability of crude oil can be impacted from highly uncertain factors ranging from the weather to the political climate. In an uncertain political climate, it would be harder for companies to access the oil due to instability and higher risk, therefore the supply of crude oil would reduce and that would, in turn, increase the price.

Effects of Weather

My friend Sam from, Weather affects prices in a very similar way. Weather conditions can lead to delays and inhospitable environments can severely limit the availability of crude oil which would increase its scarcity and make it more expensive. Weather can also be linked to seasonal demands for petrol globally.

Consumption and Price

Another important factor in crude oil prices is consumption. If significantly less people used or needed crude oil basedfuel then the demand would decrease which would lead to an oversaturation of the market from the consumer end of things. An example of this would be if there was a massive shift to other forms of energy like wind or water, the demand and therefore the price of crude oil would go down. Another example is the development of technology that increased petrol consumption efficiency. This would lead to less petrol being used, which would mean less demand.


Although the effects of taxes on crude oil are relatively minor, the taxes levied on the product does affect its end price. Of course, this varies from country to country, but countries with higher taxes will generally have higher crude oil prices, and that would also raise petrol prices. Inflation and other market variables can also affect crude oil and petrol prices.



How Petrol and its price impact the world market


During the preceding years, Petrol prices have accelerated at an alarming rate. The beginning of this saga occurred in September 2000—when a barrel peaked at $35.00, during the first week of September. Petrol was priced at eleven U.S. dollars per barrel, prior to the increase. The low represented the first in twenty-five years, and occurred in February, 1999.


After Petrol reached $35 per barrel, in September 2000, it eased up a bit; however; the price of petrol, once again, escalated to around $32 per barrel back in October and November of 2000. The futures markets, during this period and time, provided indication that the standard price of petrol would change within the next year—resulting in a price that was five U.S. dollars, per barrel, higher.


So how does rising petrol prices affect the world economy? When petrol prices rise, it is a true reflection that the global economic community is slowing down a bit. OPEC production, generally, results in the stock prices rising, accordingly. Oil prices remain in a phase of volatility. When a declination is reasonably sustained, a recent peak in pricing is short lived. The result is that inflation is less severe.


Many persons are not aware that Petrol plays such an enormous part in the way the world economy is impacted as a whole. By watching the nature of oil prices, the smart consumer is reasonably assured how other traditional markets correspond, as is indicated within the preceding text. it is suggested that the reader review, historically, times when Petrol prices rose and then decelerated. Observe how the other important world markets responded, accordingly. When oil prices decrease, as indicated within the preceding text, the rate of inflation is not as enormous. Behaviorally, then, watching Petrol pricing and its impact on the world market. The preceding consumer-related activity is very much a necessity. Send us suggestions here.