How crude oil hits the consumer

By CNN's Jillian Martin

LONDON, England (CNN) -- Consumers might not see wild swings in retail energy prices each time crude oil prices rise and fall, but oil plays a key role in the balance of the world economy.

In addition to more obvious products, like heating oil and jet fuel, plastics, cosmetics and other everyday items are derived from crude oil.

"People generally don't understand how pervasive oil and natural gas are in their lives," says Klaus Rehaag, head of oil markets for the International Energy Agency.

But discussions between OPEC members and fluctuating export prices may not have an instant impact on our wallets.

Crude oil prices have dropped about 30 percent since September 11, as demand plummeted. "You don't always see that at the pump," says Sue Graham from Merrill Lynch.

Because so many products are culled from crude oil, the effects of supply and demand scattered far beyond motorists.

The drop in export prices could seep into world stock markets. Lower oil prices can raise oil companies' drilling costs and hurt their profits.

ExxonMobil, the world's biggest oil company, is one of the top five most widely held stocks in the U.S. If the stock plunges, it could lower many stockholders' returns.

So far, though, oil share prices have not fallen as much as crude oil prices have. ExxonMobil shares have dropped eight percent since mid-September.

Many analysts agree that if oil prices reverse course and shoot higher, they could shatter the global economy's fragile recovery.

Lorenzo Codogno, head of eurozone economics at Bank of America, says: "As long as oil prices stay at the low end of the range set by OPEC, that is going to be stimulating for the global economy."

Right now, oil prices are below the cartel's target range, but Codogno thinks they have room to rise a few dollars without sparking inflation.

Because crude oil has so many uses, it is difficult to track the precise correlation between crude oil costs and prices at the pump. Yet because it is omnipresent, crude oil is an important commodity to watch.