A Well Oiled Money Machine
Crude oil prices rose above $113 a barrel - Just a few years ago, it was at an all-time high of $50 a barrel!
What is Crude Oil?
Crude oil is the black stuff that comes out of the ground. It is then extracted and refined to make petroleum, other fuel oils, insecticides and petrochemicals such as plastics, synthetic fibres, detergents and chemical fertilisers - and, amazingly, even perfumes!
Why Are Prices So High?
Like all things in life, the price depends on supply and demand, and demand has been growing as more and more people want it - especially in China and America.
The price of oil fluctuates daily, but most of the time the oil companies don’t pass the cost onto us. However, with the current big rises, they are left with no choice but to charge us more for goods such as petrol. This means we’ll have to spend more each time the car is used... and this will result in less money for luxuries! How about when you go abroad on holiday? Planes consume a lot of fuel. On average, between 15-20% of an airline’s total cost goes on fuel. In August, some of the major airlines increased ticket prices to cover increased fuel prices. So, now your holidays become more expensive.
There is a society of 11 major oil exporting countries called the Organisation Of Petroleum Exporting Countries (OPEC). They have decided to increase oil production in an attempt to lower prices.