Why Do They Show The Price Of Crude oil on cnbc? whats the importance of crude oil?
Answers
4087 points
EthanR answered 2 years ago …
Chris, recently and often at other times, crude oil is responsible for the action of the market, and also the strength or weakness of the U.S. dollar. Another thing is that gold often follows the price of oil, the reasoning being that higher oil prices are inflationary, which is bad for the dollar and good for gold prices. The price of crude oil also has an effect upon gasoline prices and the stocks of oil service and oil refinary companies, as well as Exxon-Mobil and other oil stocks.
So it's pretty important to show the price!
106 points
vision answered 2 years ago …
crude oil prices effect the world wide economy, and has a direct affect on all sectors from manufacturing to transport as everything is shipped in some form of transportation, also from farming and everything else including private driving to work or where ever else people drive there cars. As crude is a direct reflect on gas prices world wide. As world population and countries growth continues to grow it affects the supply and demand. which helps drive the price of crude along with the future market, Also the weak us dollar has a part in it all to.
Read more from vision flag as abuse great answer
4107 points
MNSL answered 2 years ago …
Oil is number one topic in the world now. Higher oil prices will increase inflation further. It will affect for industries such as Airlines, Production companies including vehicle production companies, transportation companies etc.
Lower oil prices will decrease inflation and almost all industries will benefit. Investors will have more opportunity in wide variety of sectors.
350 points
Sensei answered 2 years ago …
Oil is the single most important commodity in the world - even more so than food! NOTHING impact an economy like oil. Why? Because almost everything we consume involves oil at some stage.
Look around your house and remove everything that involved oil. Start with only one item - Plastic! Without plastic, say good-bye to your computer, TV, radio, refrigerator, stove, washing machine and other appliances ... need I continue?
How was your house built? How did they dig the foundation? Using equipment like backhoes and shovels that run on ... oil. The electrician that installed the power system used tools made of plastic and the wiring is wrapped in plastic. Oil. Your plumbing is made from plastic. Oil. Again, you get the idea.
Live in a condo or apartment building? Cranes run on ... oil.
You can also say sayonara to your car while you're at it (just for starters, the steering wheel, dashboard and probably the seats are made from plastic.) Planning on taking the bus? Uh-huh. And what will you sit on? Leather seats? Ummm, I don't think so.
Ever bought something at a store? What did it come packaged in? Plastic?
Food? Most fertilizers come from products derived from oil. And what do you think the farmers will use to plant and harvest those crops? Tractors, threshers and the like need oil or an oil product to run. (People whose political agenda is to deride the US because it's the prime consumer of oil never seem to mention that it's also "The Breadbasket of the World".)
We don't manufacture anything by hand anymore. Everything is done by machine ... and those machines need some kind of grease to keep the parts moving. Oil.
Moreover, virtually everything you own was probably not made locally. Many, if not most of your electronic equipment for example was most likely made from parts manufactured abroad. How did it get here? What about domestic production? OK. How did those Florida oranges get to you if you live in Ohio? So transportation is a factor. Oil.
The list goes on and on. And I haven't even mentioned things like gas for your car and personal travel (airlines & trains), electricity, even water is purified by equipment that runs on oil.
Chemicals. Medicine and medical equipment (syringes, etc.) Concerned about birth control? Condoms, diaphragms and IUD's are made from ... The list goes on. All these things that we use all the time need oil (or an oil derivative) to be produced.
What about the impact on inflation (and the general economy)? When the price of crude rises, the costs associated with all of these things goes up and the producers, if they can, raise their prices which leads to inflation. If they can't, their earnings suffer and if they're public companies, their stock prices suffer. Regardless of that, when a company's earnings decline, it impacts its borrowing costs leading to higher interest expense and even higher costs ... and more inflation.
Had enough? Not yet ... there's also this little thing called "sales tax". That tax is applied to the selling price so when oil goes up, costs go up ... which companies recapture in higher selling prices which get passed along the supply chain ... which leads to higher selling prices to the consumer ... and higher sales tax being charged at the checkout ... and even more inflation.
Inflation impacts the consumer's buying power so, in an attempt to get back to "even", workers demand higher wages ... leading to even higher costs ... and more inflation.
We can live without wheat - we can use rice. We can live without beef and pork. We can live without gold and silver jewelry. We can live without a lot of things for which there are substitute commodities. But the single commodity we cannot live without in the modern age is oil. And that is why the price of crude is so important. Love it or hate it ... you can't live without it.
