Rising Import Bills due to High Oil Prices Worldover
Oil Prices on the Rise
Whichever international statistics one looks at, one thing is for certain. Oil prices are on the rise in the last few years. The prices have really spiked up since the 1970s and today crude oil prices have crossed the 100 $ U.S mark and normally trade around 100 to 110 $ U.S mark. Oil is essential for the economic progress of a country. Every country in the world needs oil to power their growth story. Petroleum and natural gas is used in industry, for transportation, as a fuel in households as well as in agriculture. Sadly oil is not found extensively all over the planet. There are few countries which have extensive oil reserve and are called oil producing nations. The major oil producing countries of the world have formed an oil cartel called OPEC to co-ordinate policies of oil producing and exporting countries. Whenever there is any fluctuation in oil supply the prices generally tend to go up.
Rising Import Bills
Import Bills of many economies are on the rise. In many countries like China and India the main import is petroleum or crude oil. Without importing oil these economies cannot power their growth story. Many countries that do not have oil reserves have a high demand for oil. So in order to meet this demand the country has to import the oil from oil exporting countries. As the oil prices go up the import bills of these economies rise. This rise in import bills is felt by the government and also by ordinary citizens as both have to pay for the rising prices. For example in transportation, the government has to increase subsidy to a point after which it has no choice but to increase the prices of fuel for transport.
Due to rising costs of oil there is often a trade deficit in these economies. This means that imports often exceed the exports and there is a deficit in how much the country earns via exports and how much they have to pay for imports primarily oil. Import bills are higher than export bills and this hampers economic growth of the country. As prices rise in the future the governments of the world have to start thinking of alternative sources of energy that are not only cheaper but also more environmentally friendly as compared to oil.