What is causing the rise in the price of oil, Macroeconomics

The rise in the price of oil can be traced to a easy factor, but there are various other contributing factors.

The easiest explanation is that the demand for oil is greater than the present production. When demand exceeds supply, price will enhance, as people are willing to pay more to make sure that they get their scarce resource (oil in this case).

Depending on your political views and knowledge of the situation, you may also believe that the production of oil is much lower than capacity due to certain middle-eastern countries know that America depends on oil imports more than other countries. An enhancing in oil prices will lead to a slightly weaker US economy.

 

Posted Date: 4/1/2013 5:43:42 AM | Location : United States







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