Crude Oil Prices - Why are they so high?

Crude oil prices are mostly based on the law of supply and demand. High demand and low supply create upward pressure on the price of anything.

Oil demand has been increasing not only in the US but worldwide as countries such as China and India increase in their desire for transportation, industrialization etc – driving prices up.

On the supply side, supplies of oil are being used up worldwide and, although enormous new oil discoveries have been made in the United States, the Democratic controlled U.S. congress has prohibited drilling most of the vast reserves in Alaska, offshore and in the oil rich oil shale region of Montana, Utah and Colorado. This ban has helped create a perception of limited supply – which drives prices up.

In addition to supply and demand, the value of the US dollar is 33% lower than it was a few years ago, because our trade deficit dollars are flooding the world monetary markets . As the dollar value diminishes, it also puts upward pressure in the U.S. on oil prices and other commodities that are imported into the U.S.

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