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Whats the real reason why oil and gas prices keep going up?


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Answered 2008-05-07 21:38:21

The long-term increase in oil and gas prices is the result of global production not keeping up with global demand. Many scientists and industry observers believe that production of oil, in particular, has peaked or is currently peaking, and will, in future years, decline. It is likely that demand for oil will not decline as fast as the supply, so prices will continue to go up. In the short to intermediate term, oil prices have gone up largely because of restrictions on supply established by the global cartel OPEC. Key facts concerning oil and gas prices: * Prices are set, in the long run, by supply and demand. In the short run, the supply can be manipulated by producers or cartels, like OPEC. * Factors influencing the supply include the probably fixed ultimate quantity of extractable hydrocarbons (non-renewability), the technology of extraction, price, and market power of suppliers. * Factors influencing demand include the availability of alternatives to oil and gas (such as ethanol or electricity), price, pollution regulations, and economic growth.

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