Price of Oil

The price of oil rose above $100 a barrel on February 19, 2008, and skyrocketed up to $138.54 on June 6, 2008, a new record. Because gasoline is refined from crude oil, any increase in the price of oil will also force up the price of gasoline. On May 29, the United States government announced it would investigate whether oil speculators were manipulating prices. Although gas prices are the highest the United States has ever seen, prices in Western Europe are twice to four times higher.

Fast Facts

1. June 6, 2008: Oil closes at $138.54 per barrel
2. May 22, 2008: Oil is $135.09 per barrel
3. SUV sales are dropping due to high gas prices
4. US: 12% tax on gas
5. United Kingdom: Over 50% tax on gas

Causes

The current sharp rise in oil prices is credited to several factors. Developing countries such as China and India have an increased demand for oil, while supply has not increased at the same rate, thus making oil more valuable. The dollar has decreased in value, another factor increasing the price of oil. Investors have been buying oil futures at high prices with the expectation that the cost will go up; because so many people have demonstrated the belief that oil prices will go up, they are causing prices to escalate.

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