Things which determine oil prices

Crude oil is a substance that is needed for all of the industrial and residential purposes. To make sure that there is enough crude oil for our needs we must pay a certain amount of money to the countries that we import the oil from. These companies have a set crude oil price.

The crude oil price is based on the barrel production amount. The lower the oil production, the higher the price will be. This is due to the fact that these companies can only drill a certain amount of oil from their drilling fields. The process to transport the crude oil to the various supply houses is also difficult as the company must make sure that no accidents occur.

As oil is a valuable commodity the oil production company will make sure that they have the amount that is quoted for the refining companies and for the import procedures. Once the crude oil price has been paid it is necessary to transport the crude oil home. This is one more reason why the crude oil price is very high in some seasons and low in others.

The various governments look for different ways of finding new sources of crude oil. The closer to home these sources are the more success the governments will have with making the crude oil price low. This in turn would be passed onto the people and they would not feel the massive blow to their finances.

Some companies have started looking for large ocean deposits of oil which are located close to their home countries. This proximity allows the crude oil to be harvested and sent to the refining plant. As the drilling rig and the processing plant are found close to each other, there is less need for the worry about environmental damage occurring. The proximity of the oil drilling rig means the costs of importing large amounts of oil can be reduced.

This in turn will allow these home oil producing companies to see about lowering the crude oil price which they have fixed for domestic and imported oil prices. The lowering of the oil price will not mean that quality or oil extraction and processing amounts will be reduced.

It means instead that as the drilling rig of the oil is closer to home the large amounts of money the government needs to pay to foreign governments will be reduced. The benefits of this reduction will be felt by the consumer as they can afford to use fuel oil to heat their homes in winter minus the high prices of the previous winter heating bills.

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