Why is the price of oil so high?
Oil is the world’s most actively traded commodity. The price of oil is set in spot markets around the world. The basic unit used for oil is a barrel (although oil is no longer shipped in barrels), which is 42 U.S. gallons and has the energy content of 6 million British thermal units (BTUs). The largest oil markets are in New York, London, and Singapore but there are other oil markets all over the world. At these markets, buyers bid for future contracts for oil that will be delivered the following month. This means that prices do not reflect the status of current supplies, but rather estimates about future supplies. There are many factors that contribute to rising oil costs including increased demand from industrializing countries such as China; concerns about political events that may affect the supply of oil; and the day to day problems with production and refining that can, if numerous enough, greatly impact the supply available to meet expected demand (for more, see This Week in Pet
