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| U. S. Energy Prices |
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| Written by Jerry Dyess Jr |
| Thursday, 01 October 2009 09:42 |
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U.S. energy prices are greatly affected by industry demand. The higher the demand for fuel, the more expensive it becomes. Although the economic climate of 2009 should have reduced U.S. energy prices, growing demand for crude oil in other countries has kept the price much higher than is desirable. In between the late seventies up to 2004, the oil consumption rose by 28.6%. This year's increase in China was 25.8%. The demand in South Korea skyrocketed over this time by 344%. It's hard to believe that before the turn of the 21st century, the cost for a barrel of oil was $12. Today it has risen to around $70. The price of crude oil directly influences the cost of other fuels. Whether it be for production or generation, crude oil and other fossil fuels are vital to electricity, gasoline, and petroleum. Although oil prices dropped in the first half of 2009, due to a fall in consumption of 1.25 million barrels a day, the price will rise again in 2010 as industry recovers from the recession and demand begins to rise once more. Respectively, gasoline prices are expected to drop again in the fourth quarter of 2009, before going back on the rise in 2010. Average gasoline prices can be expected to increase by about 40c per gallon from 2009 to 2010. However, the average retail price of electricity is set to decline by 2% due to the cheaper price of fossil fuels required for generation. Let's face it, as of right now the economy is unstable and the U.S. energy costs are even more uncertain. The only way for the demand to get lower is by companies and small businesses no longer being able to afford the spike in prices. This usually occurs when fuel prices rise and are considered to high. On the surface this would look like a complete downfall, but eventually everything will pick up again. What it comes down to is a difficult balance between crude oil sales and everyone relying on one another. Eventually we'll see the fuel prices rise again when the crude oil prices do. When looking at electricity consumption through the first half of 2009, there was a large decrease. In fact, according to sources the decreases fell short of 5% by only .6% in the prior year. In the second part of 2009 though, the decline has leveled out to around 2.3%. Hopefully the prices can remain low for the remainder of the year. When the economy settles though, the industry will start to receive their increase in costs once again. Whenever a conversation starts with U.S. energy prices, the economy are enters in the blink of an eye. We can definitely say the recession is far from over, and it might take another year or two in order to see positive changes. Unfortunately, as long as we're all uncertain, the increase could come out of nowhere. Probably the worst part about crude oil prices is that they try to predict where the economy is going. If by chance it looks as though things are going to turnaround, all the sudden the prices rise. Then again, if by chance there is more hardship along the way, the costs either stay the same or drop. A good example is the unemployment world. The benefit claims have declined over the recent months, but the unemployment is still at an unhealthy level. With the lowered demand for energy, fuel stockpiles are much higher than expected. This is lowering the price, as more is available. Natural gas, for example, has stockpiles close to reaching a 5-year high. It will be a long time before demand outstrips supply once more and prices will significantly rise. However, while prices remain low, industry should be encouraged and the economy will be on its way to recovery. For now, the U.S. energy prices have declined thanks to the lack of demand. While lower prices are great, the constant fluctuation around the world will continue this crazy roller coaster. So when 2010 rolls around expect to see an increase in gas prices, but in the meantime enjoy the lower prices. About the Author: About the author: Jerry Dyess has been specializing in the Electricity market segment for the past 7 years. He has published many articles on Business Electric prices. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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