Oil Price Rising and Its Affects
Prices higher across the whole industry
The higher prices of manufactured products were caused by increases
in nearly all sectors of manufacturing. The largest increases in prices
were in the food, paper and cardboard, oil and basic metal sectors.
Lower prices were reported in the textile and rubber and synthetics industries
West Texas Intermediate, is a type of crude oil used as a benchmark in oil pricing
Disruptions in crude oil supply resulting from unrest in the Middle East and North Africa have been widely recognized as important sources of oil – and in turn gasoline- price increases since the beginning of the year. More recently, however, unusually wide gyrations in wholesale gasoline prices have shown that downstream factors closer to consumer markets can also greatly affect prices at the pump. The U.S. Energy Information Administrations (EIA) national average retail pump prices for regular gasoline climbed from $3.07 per gallon at the beginning of this year to a high of $3.97 per gallon on May 9
In fact, given the current weak state of the U.S. economy, the risk that increasing oil prices will produce significant negative consequences is rising. Even in a robust economy, sustained high oil prices can produce undesirable effects on aggregate output, employment, and inflation. When economic growth is weak, and inflation rates are high, rising oil costs add to the drag on output and employment, and can help push price inflation even higher.
In addition, rising oil prices will increase wealth transfers to oil-exporting countries, which may or may not be friendly to the U.S. They also will continue to hit consumers in their pocketbooks, imposing a disproportionate burden