How Do Oil Prices Affect Your Wallet?

It is important for everyone to keep an eye on the live oil prices as it affects a large part of our life on a day to day basis. One of the main reasons for this fact is that unlike other commodities like gold, silver, diamond etc., oil is an essential commodity and considering its usage and impact in our lives, it is probably the most important commodity in the world. A couple of decades back, entire wars were fought by some of the greatest world powers in order to gain control over large reserves and this should be enough proof to stress the importance of oil as a commodity that impacts our daily lives.

For most of us, the most direction impact in our wallets due to changing oil prices is through the petrol and the diesel that we use. Almost all kinds of motorised form of transport use some form of oil or the other. So, any fluctuations in the oil prices directly affect our wallet. Of course, it is not practicable to keep looking at live oil prices every time we use our car but it is good to know where we can see oil prices live so that we can get an idea of where it is headed and prepare ourselves if it looks as though it might start to pinch our wallet.

Apart from this direct impact, there is a much larger indirect impact of changing oil prices on our wallets. In our daily lives, we use a huge number of products, either household products, food products, food items like fruits, vegetables and processed items and it may be a surprise to many to know that the prices of each of these is affected by oil prices. All the stuff that we use for our daily lives are finished products or raw materials and they require transport. Finished products require the raw materials to be transported to the factories and the finished products to be transported back to the stores. Food items must be transported from the farms and factories to the shops as well. And as all kinds of transport depend on oil, we can safely say that the cost of each of these products and items are highly affected by changing oil prices.

And just as small bricks form the building blocks of gigantic buildings, we find that it is these small extra expenses that contribute to the overall GDP and inflation of an economy. So, we find that as oil prices rise, the inflation of many countries of the world rise up as well. Also, there are many countries which are major oil producers and their entire economy depends very closely on oil prices. You can rest assured that the large bankers and other government entities want to track oil prices live as their policy decisions might change based on the oil prices.

But in recent times, we have been seeing a trend of moving away from oil and we are seeing larger use of alternate sources of energy like solar, wind etc. This seeks to take some pressure off the large oil reserves found in different parts of the world and also ensure that there is some more equitable distribution of wealth around the world by reducing the dependence on oil and the oil producing countries. It is also good that many people around the world are reducing their dependency on oil as the burning of oil in different forms leads to a lot of pollution and is one of the major reasons for breathing defects especially in major parts of the third world.

But, the primacy of oil will continue to remain at least in the foreseeable future and though changes are taking place to reduce the dependence on oil, it is likely to take at least a decade or two for these to begin to have any major effect on the usage of oil and its variants. Till that time, it is important that you watch oil prices live and understand how it is likely to affect your wallet in the short and medium term.