Business Economics

Reasons fuel prices is increased rapidly?

  • Because of the hurricane Katrina devastation which destroyed nine (9) oil refineries in the US Gulf Cost of Mexico which has resulted in less oil being refined.
  • Because of the high increase in air travel which has seen the number of passengers traveling in the last ten (10) years doubled. As a result of this passengers are being charged more as it cost airline operators more to fill up their planes due to the limited amount of oil supply available.  
  • Because oil reserves are running out.
  • Because of China's rapidly expanding economy which has created a huge demand boost.
  • Because of greater need for crude oil suitable for processing into petrol for the fuel Sport Utility Vehicles. E.g. (SUVs) popular with US drivers.
  • Due to Global economic expansion which is driving what the International Energy Agency says is the “biggest increase in oil demand for 24 years”.
  • Because as the world major oil consumers remain dependent on the Middle East for their oil, and due to recent violence in Iraq and Saudi Arabia, this has raised fears on interruption to supplies as Iraqi exports have been cut by sabotage attacks on their oil facilities.
  • Lastly analysts also view that political tension in non-Middle East states such as Nigeria and Venezuela are having the potential to disrupt exports and has a result in prices of oil driving upwards.
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Who is responsible for the increase of oil price?

The responsibility of the high oil price lies with in theirs areas: the oil companies, the government, the Chinese economy, hurricane Katrina, and ordinary people

Firstly with the hurricane, as it is the act of Mother Nature there is not much to be said about its avoidance. But one thing is that more could have been done to prevent the damage from being on the scale that it resulted in.

Secondly with the oil companies they are partly responsible as they are producing less than before, for ...

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