Posted on: 10. 05. 18
The oil and gas industry seems to be in constant market fluctuation. Many people assume that oil prices are just an elaborate ruse run by bigwig oil companies looking to get rich off of high product demand. While supply and demand do play a large role in why oil and gas prices rise, there are other factors in the industry that have a huge impact on prices.
If you are a manager that is able to understand the “why” of price fluctuations, you will better be able to explain these causes when prices come into question. Pro-Gas, LLC is a company that is dedicated to ensuring your facility operates smoothly, so here is some helpful insight into some of the deeper aspects of what impacts oil prices.
Natural Disasters Have an Effect on Oil Prices
Natural disasters are events that traditionally cause oil prices to rise. One excellent example of disaster hiking the market price up can be seen through the impact of Hurricane Katrina in 2005. In the aftermath of this catastrophic event, oil prices rose to 3 dollars a barrel. This disaster also impacted gas prices by increasing the cost for consumers to 5 dollars a gallon.
Supply and Demand is Always an Issue in the Oil and Gas Industry
Simple economics can explain that the tug of war between supply and demand causes oil prices to change. In the United States, the demand for oil usually fluctuates throughout the year. For example, during the summer, many families opt to take road trips. This increases the demand for gas. When compared to the actual supply available in the area, customers can easily expect the price of their gas to be higher.
Interest Rates Need to Be Reviewed
Although interest rates and oil prices don’t have a direct relationship on the oil and gas industry, interest rates should still be examined when reviewing a decline or increase in oil and gas prices. The process seems convoluted but really makes sense.
When interest rates rise, the cost of living and manufacturing rises for consumers and production facilities. This means that many more people tend to stay home which decreases the demand for oil. Thus, the prices are eventually lowered.
By contrast, when interest rates drop, people tend to spend their money more freely, and oil prices go back up on the rise.
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We know that producing oil can be a costly venture. That is why we specialize in providing the most affordable, high-quality equipment to facilities across the nation. If you want to make strides in the market out of your facility, contact Pro-Gas, LLC today to find out more about our products.
