Oil is a standout amongst the most significant, quite requested, costly, and a paramount wellspring of regular vitality on the planet. Oil processing normally alludes to the aggregate number of oil barrels that are concentrated on consistent schedule through the oil extraction machines and the different penetrating procedure. The requirement and utilization of oil has expanded in business and additionally family areas. Oil provides the world's 6.9 billion people with a large percentage of their daily energy needs. It also plays a huge factor in transportation.
The price of crude oil continues to rise after 1999 and it still maintains a high level. Therefore, world oil industry is growing rapidly so that the changes in the oil market are endless making it very difficult to predict accurate trends in oil industry (China University of Petroleum, 2011).
The remarkable growth in U.S. international trade in the last 10 years has resulted in rapid growth of traffic volumes throughout the nation's transport system, and this t... ... middle of paper ... ...and labor on designs solely for marketability and production, managers should focus on the optimizing product design and packaging. A popular approach to inventory supports minimizing inventory costs at the expense of transportation costs with small and frequent shipments. However, in this environment where transportation costs are high, managers must adapt and consider shipment size, facilitating the strategy change from lean inventory to a hybrid transport/inventory strategy (Russell). High transportation costs are dependent on macroeconomic factors such as oil prices, which affects fuel prices, and the availability of transportation, which is based on the amount of trade and transactions in both the local and global sector. Both of these factors do not seem to be slowing down anytime soon.
Increasing the domestic production of oil in the United States could provide the solution for many of our economic, national security, and environmental problems. Experts agree that the cost of gasoline is based on supply and demand in the world market. Currently, the United States is one of the larger consumers of oil in the world, but as a nation, we only produce thirty-eight percent of our domestic need. We import much of our oil from countries that are hostile to the United States. This not only makes us susceptible to unpredictable fluctuations in the market, but also threatens national security.
“Market failure is a situation in which the market mechanism operates inefficiently and, as a result, does not achieve the most desirable results. (Layton et al,2016, p 99)” Energy industry is a strong backup force of the national economy. The advanced degree of the energy enterprises is the standard of judging the strength of the national economy. With the rapid development of world economic globalization, the international operation of the oil industry will make progress simultaneously. However, growth in the oil consumption demand increasing has become a common problem, this problem of resource misallocation resulted from excess development.
This source can be a possible solution to solve the energy crisis as well as the global warming issue. Introduction- Energy crisis has remained a top concern in the world today. Fossil fuels, the most widely used energy source in the U.S. and in the world, is rapidly being depleted due to the fast consumption rate. Since we are highly depended on oil for transportation, cooking, and communication in our daily lives, the oil storage is starting to run out and eventually it will be all gone. Petroleum oil is always considered as a cheap energy source; however, the price of oil per barrel and per gallon has gone up significantly worldwide.
Next, let¡¦s discuss in detail how the demand and supply relation affect the price of oil. 2. Microeconomic Analysis 2.1 Analysis of Market Form There are not so many oil producers in the world; the countries that produce most of the world¡¦s oil have formed a cartel, which called Organization of Petrolum Exporting Countries (OPEC). Those countries controlled about three-quarters of the world¡¦s oil reserve. Within the OPEC countries, they tries to raise the price of its product through reducing in quantity produced and OPEC tries to set production levels for each of the member countries.
The crisis is a nationwide energy discontent in which natural gas rates have soared to the highest level in 15 years, and OPEC has slashed its oil output again to keep prices up. Most Americans know they are the ones who are mostly to blame for the energy crisis. Americans' greed drives us to demand more space and privacy, more power and speed, and more comfort and ease. Satisfying these demands requires the burning of more fossil fuels. Due to the large amounts of energy that Americans use, the demand for more energy resources are becoming low.
With record increases in oil, natural gas, and other energy related imports, there has been a substantial pressure on the global energy and resource markets, making energy security a national priority. As China has not built up substantial strategic reserves and being unable to satisfy their own energy needs, the reliance of an external energy supply has increased dramatically. As a result, China has turned to Latin America in search of new energy resources. China has become the world’s largest producer, consumer, and importer of coal, accounting for nearly half of the world’s coal consumption. In 2011, almost 70% of energy consumption with China has been produced through coal.
Supply disruptions causes oil price to increase and could increase inflation. The lasting effects may bring stronger needs for oil substitutes . The firms who run oil business are oligopoly. Oligopoly firms are a few but typically large that controls the industry. They intend to have strong pricing power and put up a difficult barrier against business newcomers.