Family Price Fears as Petrol Predicted to Climb to $2 a Litre Article - 4

Family Price Fears as Petrol Predicted to Climb to $2 a Litre - Article Example Oil is a subject which has always been the centre of attention in economics. There are a plethora of theories and concepts which apply to this case study, but for brevity’s sake, we will limit ourselves to just a few. These include the following: The use of relevant diagrams will be made so as to establish the key facts unequivocally. Although there can be more concepts, the discussion will just be limited to inflation and its reasons, and the counteraction of the deteriorating price levels due to exchange rate differentials. We have already witnessed an oil crisis in the not so distant past when the prices went up to $147 per barrel in 2008. Back then, the prices were elevated primarily due to speculative positions are taken by investors and speculators. Today’s situation, however, it differs from the previous one due to the fact that this is an issue driven purely due to economics. The Middle East region accounts for a majority of the world’s oil-producing coun tries. Since this region has come under a lot of turmoil, the supply of oil has been witnessing bottlenecking and this has caused mass panic in the developed and developing economies the world over, to the point where alarmingly high buying is taking place. This aggressive buying by various nations  Ã‚  is driving the prices of crude oil higher and higher.   When we break it down on the most primitive levels, we see two things happening simultaneously. The first is that there is a very apparent shortage of oil as millions of barrels per days are not being produced. Secondly, these supply shocks are triggering investors, companies and even governments to buy large reserves of oil to ensure that they have adequate supply in the coming months.