How Oil Prices Raises Cost of Living - Research Paper Example

Lower prices of oil also have some impact on a number of factors that affect the lives of consumers by either raising the prices of the basic commodities or lowering them. Low oil prices reduce the overall earnings for countries’ economy leading to recess as it happened in the 1980s when the prices of oils reduced (Fried & Schultze, 1975). The reduction affected the earnings for OPEC, which in turn reduced its supply to maintain a certain price. Shortage of oil, in turn, increased its prices in the consuming countries leading to high prices for the basic commodities.

The fall in oil prices in the year 2014 will affect large economies such as the US, which have large borrowings with expectations that oil prices may go up. Anything that affects the economy of a nation affects the lives of the consumers who the country’s citizens. Rising oil prices in the international markets lead to increased prices of oil products such as cooking fuels and petroleum products. High prices of petroleum products such as petrol and diesel lead increase in the transportation costs for consumers goods forcing the sellers to increase their prices as well.

In fact, almost all the commodities used by consumers today depend on the price of oil, especially the industrially manufactured goods. Many industries use oil products to run their machines and any price fluctuation and the increase in price are passed to the consumer. Many may not be aware that many products they use for medical purposes come from oil products such as petroleum. Without the product, loss of lives will be a common phenomenon due to the lack of important medical devices and the high cost of the available ones.

Some the examples of the devices from petroleum products are vaporizers, gloves, stethoscope, anesthetic, heart valves, artificial limbs and many more (Horsnell & Mabro, 1993). Hospitals rely on the petroleum product for their daily operations without which diagnosis and treatment would be impossible.