Rising Oil Prices Cause Concerns about Inflation

This article was last updated on September 19, 2023

Canada: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…
USA: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…

Introduction

The price of oil is rising rapidly and this has consequences for many people and economies worldwide. This morning, a barrel of crude oil cost more than $95 for the first time in almost a year. Prices are also rising at gas stations.

The oil price has fluctuated between $75 and $85 for almost the entire year, but the price has been rising in recent weeks. Oil is in high demand. According to the International Energy Agency, never before has so much oil been needed as in 2023.

This amounts to almost 102 million barrels per day. This higher demand is partly because the Chinese economy is recovering from the corona crisis. Although this growth is less than expected, all in all, it does lead to more demand for oil. There is also more flying. As a result, airlines need more fuel.

Pump less oil

On the other hand, major oil-producing countries have said they will put on the brakes for the time being. Saudi Arabia and Russia want to maintain their production restrictions at least until the end of the year.

According to Saudi Arabia, this restriction is necessary because there is a lot of uncertainty about the global economy and therefore about the demand for oil in the coming months. The country points to the ailing European economy and the risk that rising interest rates in the US and the EU will lead to a downturn in the economy.

Gasoline more expensive

The higher oil price leads to new concerns about inflation. If oil becomes more expensive, it will lead to higher prices for all kinds of things, such as transportation.

This can already be seen at petrol stations. The recommended retail price for a liter of gasoline is 2.30 euros, according to United Consumers. At the end of July, gasoline was still 10 cents cheaper. The recommended retail price is not used everywhere. Refueling is usually cheaper at gas stations that are not along the highway.

Excise duties largely determine the price of fuels. A majority of the House of Representatives wants to block a planned increase in excise duties by 21 cents as of January 1, it emerged yesterday.