"Where oil is first found is in the minds of men"
Wallace Pratt (1885-1981)

Saturday, 14 May 2011

Why Doesn't the Oil Market Stay Consistent?

Crude oil (Also known as petroleum) is the actual oil that is drilled from the ground. Crude oil is NOT used for any necessities we know of. This crude oil can then become refined and made into gasoline or other products. Crude oil is a commodity, which means it is the same no matter who gets it (Corn, coffee beans, gold and copper are examples of other commodities). Since it is a commodity that means that the price of it will change whenever the world has too much or too little of it. So, whenever any natural or man-made disaster occurs (Ex. BP Oil Spill) the prices of oil will increase because we (as a world) are losing oil, making the oil that we own cost more. An example of this is when the corn prices rose when ethanol (can be produced from corn) became an alternative option for a vehicles fuel. 

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