From the average consumer’s perspective, oil price fluctuation is something to be aware of when filling up at the gas pump. The price of crude oil is determined by thousands of transactions that take place at all points in the world from the oil rigs to your local gasoline station. These behind the scenes factors influence everything from production costs to storage capacity. They also impact the decisions made by producers like the Organization of Petroleum Exporting Countries (OPEC), independent petro-states like Russia, and private oil-producing firms like ExxonMobil. The laws of supply and demand influence prices, as do natural disasters that could disrupt production and political instability in the region of the world where oil is produced.
Often, the influence of these types of forces on oil prices tends to be relatively short lived once the problem is resolved and oil and product supplies resume their normal flows. However, these kinds of issues have a major impact on the economy of countries that rely heavily on oil revenue for their government spending and general economic development. High prices make it harder for these countries to spend money on worthy projects, and low prices make those projects less financially viable in the long run.
There are a few things that have been shown to help reduce the impact of these behind the scene forces on oil prices, including regular communication between OPEC member countries and restraint in discussing disagreements in public. But these are only partial solutions to a much larger issue that has persisted for decades and will likely continue to have some influence on the global economy.