How the Price of Oil Affects the Daily Lives of Canadians
In Canada, crude oil has been a sought after commodity since the 18th century. Since then, petroleum and its by-products have become an integral part of our lives. Oil has become necessary in the manufacturing of plastic products as well as fueling our vehicles and creating significant employment opportunities around the globe.
When fuel prices go up, and even when they go down, the daily lives of Canadians can be greatly affected.
How oil prices are determined is a bit of a political game, but there’s no denying when they climb, or fall, Canadians feel the impact when it comes to the cost of food and products as well as the money it takes to maintain and drive a vehicle.
How the Price of Oil is Determined
Oil is a globally traded commodity and is delivered from market to market all around the world by ships, pipeline or barge. For this reason, there is no one entity that determines cost – the balance of supply and demand plays a large part in price.
However, the sale of oil is viewed by governments as a political function. Therefore, a rise in the cost of oil may be caused by the need of the oil-producing country to balance their budget.
Likewise, conflicts and tensions within oil-producing countries may have an adverse affect on supply, which could lead to a price increase as well.
How Oil Prices Affects Canadians
The price of oil affects just about everything that is manufactured, transported, eaten and sold. When the cost of crude oil goes up, so does the cost of fueling a vehicle or transporting food to a grocery store.
Vehicles are a modern necessity but cannot function without oil and oil by-products. For example, the lubricants that help to reduce the friction, heat and wear of your vehicle’s moving parts are all derived from crude oil. Likewise, the gasoline that fuels your vehicle is created from oil as well.
When the price of oil increases, these products do as well, making the owning and maintenance of a vehicle an increasingly expensive task.
Apart from cars and other personal vehicles, other modes of transportation are greatly affected by rising oil costs and this affects more than the cost of plane ticket.
Increases in the price of jet fuels will adversely affect the airlines’ ticket prices but, maybe less noticeably, it will greatly change the price of food delivery. When the cost of transportation products and food goes up, so too do the prices of the products and food itself.
Heart valves, artificial limbs, stethoscopes, syringes, hearing aids – most of today’s medical products are made of plastics created from oil by-products. While Canadians may not notice the rising cost in medical supplies because of our socialized health insurance plans, the government does.
Increases in oil costs affects the costs of medical supplies. As these prices increase, so too could the taxes Canadians pay to support the free health care system.
Not all negative impacts on the lives of Canadians are caused by an upswing in oil prices. When the price of crude oil takes a downturn, most companies are forced to scale back their fracking and oil sands operations and new drilling and construction projects are abandoned. This causes a rise in unemployment rates in the regions that are affected.
However, a decrease in oil cost creates opportunity for new jobs to be created in the transportation and manufacturing sectors. While the loss of job happens immediately, the creation of new jobs does take time. Ultimately, it doesn’t happen quick enough to create an employment balance.
Apache Pipeline Products specializes in pipeline cleaning and maintenance equipment. Feel free to contact us with any questions!