Oil Drilling Rig In The Gulf Of Mexico (Photo By Getty Images)
Oil prices have increased significantly from their pandemic lows and are substantially higher than 2019 levels. They don’t match the pre-fracking era of $100 oil, but they may get up there. The outlook for oil prices is driven largely by global economic growth, but it’s a complicated relationship. Gasoline prices to consumers, of course, will respond with oil prices.
Oil prices fluctuate more than most consumer prices. Big gains are often followed by large declines, and vice versa, so the recent uptick cannot be projected into the distant future.
The most crucial fact about oil is that new supply cannot be brought to market quickly. In many parts of the economy, a rise in prices leads many businesses to increase production. When cotton prices rise, for example, it takes about one growing season for them to drop again.