How does the price of oil impact companies?

2 min. reading
Commodities, Global investments by Third-Parties / 13 July, 2022

Andrea Daly Aurenty Journalist

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After the biggest fall in the world economy recorded during 2021, society continues the process of reactivating industries and activities. One of the industries that is talked about practically all over the world is that of oil and gas, whose prices have registered an increase that has become one of the reasons for the high inflationary levels that are being registered in many countries.

Commodities crisis and repercussions of rising prices

Commodities crisis and repercussions of rising prices

The commodities crisis has been caused, among other factors, by the centralization of supplies by some world powers, added to the pandemic and the Russian invasion of Ukraine.

Inflation due to the price of oil

This rise in the cost of the aforementioned resource is reflected in the companies that make up almost all industries in the world. Starting with the basic resource of the cost of gasoline, whose prices have impacted the population and do not predict reaching a ceiling in the coming days.

Companies use the fuel in many stages of their production. From transportation to the use of machinery and, for this reason, its increase considerably affects the costs of final products, thus leading to a generalized increase that ends up being classified as inflation.

Inflation in certain countries with depreciating currencies can be an issue that is dealt with almost daily. However, high inflation levels in countries such as the United States or Spain have an impact as they give an idea of ​​the state of the economy worldwide.

Another common use of oil is to produce energy, an industry that has been affected both by the state of the world economy and by the conflict between Ukraine and Russia, the consequences of which have hit the economy of each country hard.

It can be stated then that oil is a resource of vital importance for the operation of all industries and its disproportionate increase has been reflected in the inflationary levels of each country, where the support granted by government entities has not been sufficient to mitigate the increased costs in the lives of citizens.

The future of the oil and gas industry

While the world is on a path to declining use of non-renewable resources, the pandemic and the unexpected conflict between Ukraine and Russia have put a long pause in those efforts as the oil and gas industry continues to be of vital importance. for the proper functioning of society.

This has directed all efforts towards increased oil production that can match demand and cause a decrease or at least a stabilization of costs. Therefore, there are concessions granted to countries that have this resource, even when the industry within these countries is not fully developed.

However, this is a long-term solution. It is a process that involves a high investment, labor and structure.

At the moment, the governments of each country are taking actions to protect their companies and citizens, while the costs of gasoline, electricity and daily life products continue to rise.

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