The headlines of most of the crude oil news
reports are totally taken up by the news stories related to the rise in crude oil pricings. Crude oil market has been showing its monopoly in the global economy for the past couple of years. Most of the global economic failures that occurred in the past were in some way or the other connected to the fluctuations in crude oil prices. But the recent one was something different from the previous ones, and mounted up steadily. Most of the countries, developed as well as developing, had foreseen the disaster, and had prepared themselves to face the aftermaths of the disaster, which was unavoidable.
A close look at the calculation of OPEC will help in understanding the importance of crude oil prices in global economy. The OPEC reference basket of crude oil recorded a price range between US$20 and US$40 / barrel between 2001 and 2004. This grew over US$70/barrel in 2006 but again showed fluctuations, coming down to a level of US$55/barrel. In real terms the crude oil rates that prevail now are much lower than the rates that were heralded in the beginning of 80s. US crude oil rates reached its highest records in July 2006, a record rate of US$78.40/barrel. Most of the crude oil experts and analysts had predicted a crude oil price of US$105 during that time.
The main reason behind the rise in crude oil prices is the difference seen in the supply and demand of oil and gas products. Oil refineries find it very difficult to increase the supply, with the increase in demand for oil & gas products. Hence we have to reduce the usage of oil and gas products greatly, and opt for alternative energy resources, to reduce the crisis.