Oil prices are decreasing and I know we are all happy about it. Check this article on Never pay full price at the gas station..Read to know more. We also use gasbuddy.com and cheap gas to find gas stations with lower price around our area.
Usually gas prices reduce during winter and increase during summer. That is the trend I have observed, so this year also I thought it is just that it is winter and the prices are going down.But when it reached the below $2 mark I got curious about what is going on..This is nothing but a supply and demand thing, Last year summer the supply was less but the demand for oil from US, China and Japan and other countries was high. That is when we saw the gas prices shooting up to around $4 and oil per barrel was around $110. The US started to drill its own oil at the shores of North Dakota and increased its production of barrels per day. Now the demand is also slowing down due to economy slow down in other countries, this lead to the lowering in oil price.
When something like this happens OPEC (Organisation of Petroleum Exporting Countries) has traditionally reduced its production to hike the prices back up, but this time they decided not to do it since earlier they did this and the prices kept going down and they lost a large amount of market share. So the supply is more now and demand is less. This leads to lower prices.
This lowering of oil prices has shattered the economy of countries like Russia and Venezuela whose revenue is mainly based on oil export. So when Putin was asked the same question “Why oil prices are reducing ?” He answered :Politics. So what ever may be we are happy when the prices go down but we will have to wait and watch on what happens to the economy of these countries. Please share your thoughts and comments.