When It Comes To Oil Prices History Will Be The Judge
Michalis 'BIG Mike' Kotzakolios


Defined Tag: Oil Prices History.

Oil prices history is both long and rife with variation. At one point, when oil was first discovered and employed as a means of generating energy, it was thought to be available in a quantity that could never be exhausted. And had production levels and technologies remained constant, that would have been true. But they did not. In fact, this new source of energy gave people reason to invent equipment that improved the productivity of workers in many different ways. This then fueled the demand for more oil. And since then, since the discovery of oil, prices have shifted around rapidly, reflecting unpredictable changes in supply and demand.

The Western nations, especially the US, have participated in and suffered from oil price increases. Recent events in the U.S. have pushed gasoline prices to double or triple their normal values. The law of supply and demand may have been one of the initial factors that precipitated this historical oil price increase. Inexpensive gasoline led to consumers purchasing larger trucks and sport utility vehicles to carry their families. Initially, the fact that these vehicles consumed a massive amount of gasoline was not a problem, since the actual price of gas was quite low. But that all changed.

Historically low oil prices gave way to record high gasoline prices after Hurricane Katrina struck the Gulf Coast of the US. This massive hurricane damaged or shut down much of the Gulf Coast oil production. Fears of limited oil supplies increased low historical oil prices, sending gasoline prices soaring. This was devastating to citizens accustomed to pumping large volumes of cheap gasoline into their large SUVs.

Events in the Middle East and other large oil producing areas also have a profound influence on the history of oil prices. Peaceful times generally mean abundant oil production and historically low oil prices. Unrest, political upheaval, and outright war naturally cause oil prices to rise as investors become nervous. When considering oil prices, the turbulent history of the Middle East has played a prominent role.

To name only a few things, natural disasters, political turbulence, overconsumption, and outright war or disruption of supply have all been responsible for changing the price of oil. Additionally, perceived changes in the supply of oil (either finding more oil, making it legal to drill for that oil, or finding out that less oil is available than was expected) have also had a massive effect on prices. World financial markets also participate in the game of setting global oil prices. When it comes to the deciding factor in setting oil prices history will have the last word.