Problems throughout the Middle East have led to a recent surge in oil prices today with some experts predicting that the price for crude oil could reach $200 a barrel. The rise in oil prices will affect all the oil consuming nations around the world. To understand how oil prices will affect your lifestyle it’s important to examine how oil affects the cost of everyday items purchased by consumers.

The most obvious consequence for a rise in oil prices is the affect on fuel prices. Most vehicles use fuel derived from crude oil so therefore a rise in crude oil prices will mean it will be more expensive to fill your car up at the gas station. This rise in the cost of transportation will also mean it will cost more money to deliver goods, such as food to the supermarkets, than it did before. These additional costs will get passed on to you, the consumer, meaning the cost of your weekly shopping is likely to increase.

As well as transportation, much machinery that is used to manufacture goods is reliant on oil based fuels in order to run. The extra cost of making these goods coupled with the extra cost of delivering them will mean higher prices for everyday goods. In many countries, oil fired power stations are still in existence and active use. A rise in oil prices will mean these machines will cost more to operate meaning the average households fuel bill will likely increase too.

All these rising prices will in affect mean the cost of living today is more than it was when oil was under $30 a barrel. This rise in the cost of living is known as inflation and one way in which governments try to curb inflation is by raising interest rates. Of course a rise in interest rates will be good for savers, but it will also affect the millions of homeowners who have outstanding mortgages. Effectively it will mean the cost of your monthly payments on a mortgage may increase.

This analysis is perhaps over simplistic as there are many other factors that dictate price and interest rate movements but it illustrates how the price of oil affects our daily lives. It also perhaps shows how dependent we are on oil and highlights the need to examine the use of alternative fuels in a bid to reduce that dependence.