What is the problem with rising oil prices and why do they cast such a shadow?
The most obvious effect of a rise in oil prices is, of course, the price of petrol, which in turn mostly affects people with cars. This impact is more pronounced for US drivers since the amount of tax as a percentage of the overall price there is much less. It is not just drivers who may suffer, however rising oil prices lead to higher business costs, which reduce profitability and can therefore lead to the loss of jobs. Major users such as the airlines and road transport companies will also feel the pain and often use hedging strategies (that is, locking in to what they hope will be lower prices by buying oil futures), though this option is not always efficient for the smaller companies, who remain open to market forces. The received wisdom is that higher oil prices are negative for the growth of an economy, particularly countries who are heavy importers. There is also a worry about keeping the demand-supply forces in equilibrium and OPEC ( Organisation of Petroleum Exporting Countrie
