When it comes to the price of oil and gas, the majority of people believe that the price increases are due to high demand, but this isn’t entirely true. While increasing demand does contribute to rising prices, there are several other factors that influence them as well. As you consider why oil and gas prices UK have increased recently, keep these causes in mind so you can plan ahead with confidence for the future.
Current Market Conditions
If you’re looking to invest in oil and gas, you might be scratching your head. Why is there so much confusion around what’s happening right now with oil prices, how it impacts gas prices, or why gas prices are dropping in some areas while going up in others? The reason is simple: oil isn’t one homogenous commodity—it’s actually a combination of different types of petroleum products that are delivered to consumers differently. Oil can be sold directly to end users like individuals or organisations, but it’s more commonly used as a petrochemical feedstock from which other fuels (like gasoline) are derived.
The Main Reasons
Oil and gas prices are usually linked, so when one goes up, it is quite possible that other will follow. However, oil demand is almost always greater than supply. That’s because of heavy investments in finding new sources of oil around the world since they are a finite resource; we have to find more each year just to meet current consumption. Last month, OPEC announced that its members would begin cutting their crude output by 1.2 million barrels per day (bpd) at least through March 2018—this announcement sent prices higher on speculation that there would be less oil coming onto global markets at a time when demand is already rising quickly.
Other Issues
The main reason for higher prices is high demand. There has been a surge in demand for oil because of increased use in Asia and other developing nations, according to Bank of America Merrill Lynch. In addition, supply cuts by OPEC (Organization of Petroleum Exporting Countries) will reduce global output by an estimated 1.5 million barrels per day, which should also help oil prices rally even further. Finally, there’s geopolitics at play as well.
What Can We Do About It?
The government has stated that they will do what they can to help people out when it comes to high oil prices. This is great, however there are steps you can take yourself to ensure you save money on fuel costs. You may be surprised by just how many little things affect your gas bill. It could be something as simple as driving at a consistent speed. Reducing your speed by 5mph saves you 3% in fuel cost alone! Making these small changes now could save you a lot of money over time. There’s plenty more ways to reduce your bills but don’t let them slip from your mind until we experience a downturn in prices. Make sure you keep up to date with developments in oil and gas prices so you know where things stand. Then look into ways that you can cut down your consumption and start saving right away.
