1. Abstract The objective of the study is to measure the impact of changing oil prices, and other macro economic variables like consumption, government expenditures and average exchange rates on Gross Domestic Product-GDP in the context of Pakistan’s economy. The study is secondary data based and the observation is 150 with five variables and 30 years of data. The data is taken from World Bank, Inflationdata.com, State Bank of Pakistan, Economic Survey of Pakistan, Federal Reserve Bank of America, Federal Bureau of Statistics Pakistan, Pakistan Development Review, Federal Board of Revenue, OPEC and Euro Journal. First the stationary of the variables were checked by augmented dickey fuller-unit root test and data. All variables were stationary except the average exchange rate which was non stationary. By ordinary least square method and Johansen Cointegration test both short rum and long run relationship is found. The major finding of the study are these that changing oil prices have negative relationship with GDP, while changing government expenditures and average exchange rates have positive relationship or impact on GDP. Since oil is the major import of Pakistan and every year we spend a lot of foreign exchange to purchase this basic necessity so that for government there are two policy recommendations. First that the government must either try to find out cheap and better substitutes for oil like CNG or LPG but must also try to involve foreign Multi-National Companies MNCs to do oil exploration specially in Attock region, Balochistan and Sindh to exploit these available resources to over come this deficiency. Secondly if government gives subsidy to encourage common man to raise his purchasing power, this puts additional pressu... ... middle of paper ... ...l security Washington Hillard G. Huntington(2007), “Oil shocks and real U.S. income.(Industry overview)”, | The Energy Journal. Karl Scerri and Adriana Reut (2009), “UK public finances and oil prices: tax bonanza from black gold”, Directorate for the Economies of the member States, EU. Rehana Siddiqui (2000) “Demand for energy and the revenue impact of changes in energy prices” Pakistan Institute of Development Economics Islamabad Syrous K. Kooros, Ayser Phillip Sussan, Marjorie Semetesy (2006), “The Impact of Oil Prices on Employment”, International Research Journal of Finance and Economics US Department of Energy report 2006 pp 145 12. Websites www.iags.org www.worldbank.org www.sbp.gov.pk www.fianace.gov.pk www.worldbankdevelopmentreport.org www.entrepreneur.com www.e1.newcastle.edu.au/coffee www.eurojournals.com/finance
At the turn of the century there was a new law named “Capture” therefore; whoever produced the oil owned the oil. If you did not produce the oil then somebody else would be willing to produce the oil. The consequences if the production of the well ran dried out weight the reward. “Oilmen were not the only ones who knew that production was often short-lived; bankers quickly learned that no prudent lenders extended a loan on the basis of oil production. “ It was a reality that oil production started of strong and quickly dropped off within a matter of a couple months. The risk was not worth the reward for either party which is the bakers or the oilmen. The ferocious cycles from boom to bust, from having more than enough oil to not enough would swing the price for oil up and down like a roll coaster. When a new oil field came in, the local markets hand more than enough oil, pushing the prices lower, making oil more affordable. However, whenever the oil production dropped it would send the prices sky rocketing making it unprofitable to stay in business. Pattillo Higgins would be willing to take on this challenge head on of producing oil. [Who is Higgins, Ernest? By giving at least a short introduction the readers w...
Steffy, L. C. (2010). Drowning in Oil: BP and the Reckless Pursuit of Profit. McGraw Hill.
Scarlett, M. (1977). Consequences of offshore oil and gas-Norway,Scotland, and Newfoundland. St. John's: Memorial University of Newfoundland.
In 2004, crude oil producers around the world expected a 1.5% growth in the world’s demand for crude oil. The actual growth rate was more than double the projections at 3.3%. This growth was due to rapidly industrializing of foreign countries such as, China and India. Therefore the lack of crude oil affected the supply of gasoline to consumers at the pump.
Macroeconomic Forecasting Abstract Annual data was gathered on the United States' Gross Domestic Product and the economic indicators of unemployment, employment growth, inflation, and interest rates. Using 2004 as the base year, forecasts for the next two years were taken from three different forecasting organizations and compared to historical figures. Differences in projected data were addressed, as well as relationships between forecasts and among the targeted indicators. The results of the economic forecasts were applied to current Motorola operations and plans.
The benefits of oil drilling in Alaska are the reduction of foreign oil dependency. In 2012, petrol...
This model shows the decrease in investment purchases, decreased the aggregate demand, showing the GDP to also decrease as well. “The decreases in investment purchases was in all components of investment spending; producer equipment, producers structures, residential structures and the changes in business inventories.” (The U.S. Recession of 1973-75).The oil price increases from the OPEC, causing a decrease shift to the aggregate supply because oil is a component on the supply side. Below is an AD/AS model to show the shift in aggregate supply from the cause of increase in the oil price. This graph shows by the change in aggregate supply, it caused an increase in price level and a decrease in GDP.
One of the ways the oil boom has helped is by creating new jobs for people. Unemployment has decreased and employment has increase since the oil boom moved into my hometown. For the month of March 2014, North Dakota had the lowest unemployment rate at 2.6% and it has been steadily decreasing since 2009. The chart to the left shows the United States unemployment rate for the month of March.
To understand the increase in gas prices, one must first identify the distribution of dollars paid per gallon at the pump. According to the U.S. Energy Information Administration (eia) in 2010, the annual average paid at the pump consisted of 68% crude oil, 7% refining, 10% distribution and marketing, and 15% taxes (see Fig.1). This shows an increase of crude oil over the 2000-2009 average of 51%. (e. I. Administration)
Wright, R. T., & Boorse, D. F. (2011). The U.S. dependency on foreign oil presents many negative impacts on the nation’s economy. The cost of crude oil represents about 36% of the U.S. balance of payments deficit. Wright, R. T., & Boorse, D. F. (2011). This does not directly affect the price of gas being paid by consumers, but the money paid circulates in the country’s economy and affects areas such as the job market and production facilities.
Mast, Tom R. Over a Barrel: A Simple Guide to the Oil Shortage. Austin: Hayden, 2005. Print.
Money supply is the availability of money in the hands of the public (economy) that can be used to purchase goods, services and securities. In macroeconomics, the price of money is equivalent to the rate of interest. There's an inverse relationship between money supply and interest rates. As money supply increases, interest will decrease. On the other hand, interest will increases as money supply decreases. It is very important to understand that the economy works at market equilibrium. There are several factors affecting money supply; and these contributing factors will be the main focus of this paper. Understanding the basic principle on money supply is imperative to have a good grasp on the macroeconomic impact of money supply on business operations.
In order to assess the current state of the economy, the examination of important economic indicators or variables has always played a vital role in the understanding of the complex economic systems we live in. The analysis of these economic variables studied by many, not only has served as a tool to evaluate the current economic performance of a country, but also has allowed experts to envisage and continue the pavement of an economy's road. Currently, some economic variables have had favorable improvements indicating a general good outlook for the economy for the following months, requiring a further individual analysis and comparisons in order to foresee crisis or successes.
Gas has many effects in our society, and some of these effects have a negative impact in our life. Our daily lives depend on gas, when we go to work, school and going out. We use gas for electricity, cars and many other things. The effects of gas are direct and very affecting in our lives because of the many forms it can be used in. There are many negative effects of rising gas cutting back in vacation time, prices of everything is going up “inflation”, car companies making more efficient cars.
For commodity price, the demand and supply are directly contributing to the price volatility. The changes in interest rates and exchange rates are significant influence for commodity output and it also has impact on the commodity prices (Dornbusch 1976). For example, based on the equation of AD=C+I+G+NX. If the government expenditure increases, it will tend to