How The Price Of Oil Affects The World Economy
We all know that oil is an important asset, which is really valuable. But, how can the price of this fuel affect the economy of entire countries and in what way? Let’s explain the way in which the price of oil has managed to affect the world economy in the past and the ways in which it could affect the world economy in the future.
How The Oil Affects The World?
Global economy is very much influenced by the price of oil and it is understandable that fluctuations in the oil market will also reflect on the economy of the world. As the prices of oil have been low since 2014, it is expected that we will see global benefits of this current trend. The prices of oil have been reducing gradually after they have abruptly skyrocketed after the crash of the banks which happened in 2008.
We can hope that the progressive growth will slowly show across the entire world, and thus affect the world economy as a whole. The more worrying all oil prices is expected to keep the world economy in balance and make sure that any sharp changes in oil prices are just sporadic.
Why Do Oil Prices Fluctuate?
The reason why the price of oil frequently fluctuates is the global supply and demand of oil. In other words, the world price is directly affected by the global growth or global decrease of growth. As the demand for oil increases so does the supply. Because at the moment we still have sufficient supplies of oil which we use as the source of energy. However, it is also advisable that people work on alternative sources of energy and create renewable sources of energy which will be available to everyone. With renewable sources of energy we will not have to rely so much on oil, and it will have such a significant impact on the world and global economy.
At the time being low oil prices are at our disposal but all this can get a lot more complicated due to unexpected episodes which might happen such as shortage of oil or other world crisis. It is dangerous to put such strong emphasis on oil because any negative feedback can make devastating effect on the entire global community and create serious financial problems on a global level.