The recent economic trends have elicited an aspect of growth in economic activities across the globe irrespective of the fact that many nations are emerging from economic downturn after the 2007/2008 economic and financial crisis that swept across the globe. One of the trends that are clearly noticeable is a rising oil prices. This has been contributed by different factors that affect the demand and supply of oil across the globe.
In reference to BBC (2004), one of the major causes of the rising oil prices is the rise in global demand for oil. In line with this, fast-developing countries such as China and India have increased their oil consumption by a large percentage as they seek to develop as their Western counterparts. Whereas this is case, there have been interruptions in the production of oil and pipeline operations in Nigeria and the Caspian region, as well as a shutdown of Mexican exporter terminals in the Gulf Coast because of bad weather, which has resulted in low supply of this commodity (Mouawad, 2008). Additionally, OPEC, which produces about half of the world’s crude oil, has been controlling the supply of oil as a way of dealing with the falling prices. In this respect, this organization has managed to keep oil prices as a high as possible (BBC, 2004).
Increased use of automobile is also a factor that has contributed to a rise in oil prices. In reference to the Associated Press (2007), there was a rise in the sales of hybrid vehicles by 28% in the United States from 2005 to 2006. It is argued that consumers bought 254,545 hybrids in 2006 as gasoline prices hit $3 per gallon or more for much of the year, up from 199,148 in 2005 (Associated Press, 2007). On the other hand, the rate of using of normal vehicles is still relatively high. Whereas developed countries such as the United States have been working on replacing normal vehicles with hybrid vehicles, the number of normal vehicles is relatively high across the globe.
In summation, there are different factors that have contributed to the current high prices of oil. Among these factors are; increasing demand of developing countries such as China and India, low supply due to OPEC controls, speculations about the availability of this commodity in future, thus increasing the current demand. In addition, the increasing use of automobile across the globe has also contributed to high oil prices.