Crude oil prices are the prices charged for a gallon of crude oil. Crude oil is traded as a commodity on world financial markets. Investors place or sell orders of bulk crude oil for the crude oil price at the time of the transaction. As a commodity, the quality of the crude oil is not of concern to the buyer. Commodities are expected to conform to industry quality standards. Therefore the buyer needs only be concerned with the crude oil price and does not have to verify that each lot of crude oil is acceptable.
Oil prices affect many aspects of most global citizens. A low crude oil price is often accompanied by calmness in the worldwide political arena. Low crude prices generally mean a prosperous economy and inexpensive gasoline. Manufacturers can create consumer goods for lower prices, these goods can be transported more cheaply, and consumers pay less for these goods. Low oil prices are a promising economic indicator of a healthy economy and general prosperity.
A high crude oil price has a negative effect on economies. High crude prices can signal some sort of political disturbance in the world, including border conflicts or even war. High oil prices affect the prices of consumer goods in a vicious cycle. Manufacturers must pay more for oil based raw materials. The costs to run the factories to create the goods increase, as does the costs to transport the goods to the stores.
The manufacturer passes some or all of their oil price increase on to the consumers. Consumers are forced to pay for higher gasoline prices, and therefore have less money to spend on consumer goods. As a result of lower profits from the high crude oil price, the manufacturer sometimes raises their prices again just to break even.
Worldwide financial markets have a great influence on the price of crude oil too. Panic in one market can cause frenzied activity in markets across the world. Crude prices will fluctuate in these situations. News of earnings forecasts being met or not, oil company profits, and discoveries of new oil fields cause changes in crude oil's price in either direction.
Almost everyone likes a low crude oil price. Low oil prices are helpful to businesses and consumers alike. As long as crude oil prices remain high, everyone must scramble to cope until the prices reach more reasonable levels.
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