How have oil prices affected our economy Essay Example | Topics and Well Written Essays - 750 words

How have oil prices affected our economy - Essay Example This abnormal worldwide condition reduces the value – the purchasing power – of money and it buys less than it previously did. Hovering at $130 a barrel in June of 2008, oil price has fast become a central problem affecting global politics. Nations with oil supplies recognize the scarcity and importance of oil and deal with any government and the proceeds may be lost either to corruption or may deprive other countries of a much-needed development. It is a huge investment (oil), that some governments use this as leverage for threats and financial advancement. As this has become a global phenomenon, the increasing oil prices have been felt more significantly in the airline industry and other industries as well. The high fuel prices have affected the number of cities major airlines serve as they battle to rise above the oil crisis. Jet fuel prices prompted an airline company (the Alaska Air) to even end its international flights on July of this year to curb the costs of maintaining its company afloat on a floundering market availability of oil alone (â€Å"Oil and Gasoline,† 2008). One can fairly observe the downtrend of most flights in commercial air service as well as this also affected through rising air fares where traditionally, air fares are cheap and commuter-friendly. This turmoil in aviation trickled even in earnings projection that foresee a collapsing and a bleak revenue outlook until next year. Due to these developments, airlines have been forced to cut jobs on their employees thereby increasing the statistics on unemplo yment and job security of employees is waning. The oil surge is spreading economic gloom as thousands turn jobless after companies dependent on oil such as the airline industry struggle to make ends meet and stay afloat in the business. As the shocked employees of airlines investors and airlines companies affected by the oil price increase