Fluctuating Fuel Prices

Fluctuating Fuel Prices

Fluctuating Fuel Prices
Michael Butler
COM 150 Effective Essay Writing
Instructor: Nicole Floyd-Turner
Axia Collage
May 24, 2009 
Fluctuating Fuel Prices
    Fluctuation of oil and gas prices can seem like a rollercoaster ride and is attributed to supply demand and the cost of the materials.
Why it is that gas prices at the pump feel like a rollercoaster ride? Could it be that the cost of crude oil is rising and falling or could it be that supply and demand is pushing the prices up? Like most of the things that people buy, supply and demand does affect the price of oil. However, oil prices are is also affected in a major way called oil price futures that bought and sold in what is called the market calls the commodities futures exchange.

    Cost of crude oil fluctuates on a daily basis and depends for the most part on how much investors could make on the cost of crude oil as well as potential world crisis in oil producing countries.
Crude oil prices are affected by many different reasons. One reason would be that oil is traded on the commodities futures exchange. Commodity traders drive the cost of crude oil up even though supply is up and demand is down. Another reason would be the volatile environment in other countries and the potential world crisis in oil producing countries can dramatically change oil prices. The main reasons would be the increased flow of investment money that is used to invest in the commodities market as well as the environment in oil producing countries. “Oil futures, or futures contracts, are agreements to buy and sell oil on a specific date in the future at a specific price. Traders in oil futures bid on the price of what they think the oil will trade at. They look at projected charts of what supply and demand might be to determine the price. However, if traders think the price of oil will be high, they will create a self-fulfilling prophecy by bidding up oil prices. This can create high oil prices even when there is...