Supply and Demand of Oil
argumentative Essay
1396 words
Oil is an essential resource in the whole world. People use oil in a variety of ways. The world has used oil for many years and it will still use it as a basic commodity. Oil use can be traced back to 1850s. However, when Edwin Drake produced commercially usable quantities of crude oil from a 69-foot well in Pennsylvania in 1859, he marked a new period that considered oil as a valuable commodity. Oil prices have been inconsistent since 1859. The discoveries of more wells considerably lowered oil prices and made some oil barons abandon the industry. However, oil prices have increased over time because of several factors.
Many factors determine the supply and demand of oil in the short-term and long-term range. First, conflicts that occur in the world influence the supply and demand of oil. For instance, the onset of the United States of America Civil War brought about a surge in prices and demands of oil. It amplified the effects on the oil market by the cut-off of supplies of turpentine from the South and the introduction of a tax on alcohol, which rose from 20¢/gallon in 1862 to $2/gallon by 1865, in contrast to the 10¢/gallon tax on products derived from petroleum. Assuming a yield of about 20 gallons of oil per barrel of crude, each 10¢/gallon tax disparity on petroleum product cost of two dollars per barrel, which was a competitive advantage for oil. Because of this, the tax eliminated alcohol as a competitor to petroleum. As a result, oil production declined after 1862, even as new demand pressures grew. Other conflicts that affected the supply and demand of oil include the OPEC embargo that happened between 1973 and 1974, when Syria and Egypt attacked Israel. Others are the Iraq-Iran war between 1981 and 1986, the first P...
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...be more than two hundred dollars.
In conclusion, the supply and demand of oil is a complex issue that depends on several factors. Geopolitical affairs are the major issues that affect supply and demand of oil. Geopolitical factors include wars, uprisings and political inconsistencies in the world. Other factors that influence the demand and supply of oil include market domains, availability of oil, recession and the world GDP. Since 1859, the price of oil has been inconsistent. Despite the fact that oil prices increased and fell, there has been a considerable rising trend in those prices. In most cases, the falling of the price reaches the previous price level. However, increase of prices goes beyond earlier prices. This trend has seen oil prices rise over the years. With this in mind, it is clear that by 2020 the real price of oil will be more than 200 dollars.
In this essay, the author
- Explains that oil is an essential resource in the whole world and people use it in a variety of ways. edwin drake produced commercially usable quantities of crude oil in pennsylvania in 1859.
- Explains how conflicts in the world influence the supply and demand of oil, such as the opec embargo, the iraq-iran war, and the venezuelan unrest.
- Explains that technological advances and industrial revolutions have increased the demand for oil. the current world operates with machinery that requires oil as a resource.
- Explains that future oil prices will rise relative to cash prices in case of a large number of buyers of forward contracts entering the market.
- Explains that the interaction of growing petroleum demand with production turn down from mature producing fields shaped the 1973-1974 and 2007-2008 oil price hikes and in the 1862-1864 and 1895 price run-ups.
- Explains that demand for oil has continued to grow, with world real gdp increasing with an estimated additional 5 percent per year in 2006 and 2007. short-run price flexibility of oil demand has never gone so high.
- Explains that the world recorded a tremendous global economic growth in 2004 and 2005. strong demand pressures were the key reason for the steady increase in the price of oil over this period.
- Analyzes mills' argument that a physical shortage won't occur in the free market, while geologists argue that the equilibrium will result in intolerable high oil prices that could lead to economic collapse.
- Explains that global economic recession and price control issues play an essential role in oil prices.
- Explains how price controls affect supply and demand of oil. they explain how the gradual lifting of prices was the explanation for the discrete leap observed in prices.
- Concludes that the real price of oil will be more than two hundred dollars, in 2020. the cpi prices in 2005 were estimated at 195.3.
- Concludes that the supply and demand of oil is a complex issue that depends on several factors. geopolitical factors include wars, uprisings and political inconsistencies.
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- The Impact of the Oil Crisis on the American Economyanalytical essayThe Impact of the Oil Crisis on the American Economy With the current spike in oil prices, many American consumers have asked, 'what is going on?' In order to fully understand the current situation and how it is affecting the economy one must look at a variety of factors including: the history of oil crisis in the United States, causes of the current situation, and possible outcomes for the future. It is only after meticulous research in these topics that one is prepared to answer the question, 'what is the best possible solution to the oil crisis?' Although many critics have not yet labeled the current oil situation a 'crisis,' there is sufficient evidence that it is becoming more severe and is beginning to reflect oil crisis of the past.
In this essay, the author
- Explains that the oil crisis of 1973 began in the mediterranean because of a war, and the yom kippur war resulted from an attack on israel by syria and egypt.
- Explains that the oil embargo was imposed by the then-powerful cartel, the organization of petroleum exporting countries (opec).
- Explains how nixon tried to bring peace between the arab states and israel, but the scandals of watergate overshadowed his efforts.
- Explains that oil prices have been rising at an unprecedented rate, reminiscent of the seventies shocks. these dramatic price increases have both impacted the u.s. and world economies.
- Explains that oil's recent price fluxuation was caused by opec, the u.s. dependence on foreign oil, and the recent conflicts in the middle east.
- Explains that with the continued rise of petroleum, the government and other sources have begun to look at possible solutions to this problem. the impact of a virtually doubling in residential home heating costs along with sharply higher gasoline prices has justified drastic measures.
- Explains the low-income home energy assistance program, originally established in 1981 and reauthorized several times. the program reimburses needy consumers who have responded to higher oil prices and made rational decisions.
- Analyzes johnson, t., and knight- ridder/tribune business news. amid heating crisis, new jersey residents look for energy alternatives.
- Analyzes how richardson says proposals to alleviate oil crisis.
- Analyzes how heating oil prices ride crude rally to record high.
- Explains that the current oil price spike began in 1999 due to a variety of factors, including the history of oil crisis in the united states, causes, and possible outcomes for the future.
- Explains that oil prices have fluctuated between 1970 and 2000, causing volatility in the united states' economy. the arab oil embargo of 1973 caused a widespread oil crisis, the 1979 iranian revolution caused another crisis and the persian gulf war.
- Explains that the oil crisis of 1973 affected motorists, airlines, and the economy. the decline in the u.s. auto industry contributed to the recession.
- Explains that the oil embargo ended in 1974, but a second oil shock jolted the industrial world in the winter of 1978-1979.
- Explains that the third major oil crisis in u.s. history began in 1991 as a result of the persian gulf war.
- Analyzes how opec's increase in production led to a rise in crude prices.
- Explains that the united states' dependence on imported oil will grow to sixty-six percent by 2020, far higher than the record set in 1998 of fifty percent.
- Analyzes how the conflict in the middle east is threatening to end the longest-running economic expansion in united states history.
- Argues that the u.s.'s dependence on foreign oil has a significant impact on the economy.
- Explains that the strategic petroleum reserve was authorized in 1975 to create a below-ground reserve of crude oil that could be tapped in the event of an interruption in supply.
- Opines that the proposed reduction in the tax of gasoline, diesel, and kerosene would not cost the government anything.
- Explains that alaskan oil exports declined from 1.50 million barrels per day to 1.05 mbd, greatly diminishing any west coast production surplus that might have once existed.
- Opines that the heating oil crisis is in full swing and that a dialogue with the public, industry, and government is needed to solve it.
- Reports that high gasoline prices in the u.s. have revived interest in electric vehicles, but it would take more than soaring gas prices to move american motorists away from conventionally powered vehicles.
- Opines that alternative fuel sources are the best solution to the oil crisis.
- Explains that energy efficiency expands the economy and creates jobs.
- Compares slavin, b., and sheets, k. on the mideast crisis erupting on two fronts.
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In this essay, the author
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- Explains that unexpected production difficulties contributed to the supply of gasoline. the insurgent attacks and the war in iraq made it difficult to properly export the oil.
- Explains that the gulf coast hurricanes in 2004 disrupted the output of crude oil in u.s. refiners. the workers strike in norway severely affected production.
- Compares the u.s.'s consumption of gasoline and crude oil over the last twenty years.
- Explains that the price of gasoline is affected by many different factors, but the biggest influence is crude oil. the federal trade commission conducted a regression analysis of the u.s.
- Explains that the importing of crude oil affects gasoline prices. the u.s. refiners import 60% of their oil supply due to depleting supplies.
- Explains that the clean air act requires that certain geographical areas have various blends of gasoline until the area has met a particular set of clean air standards.
- Explains that state taxes drive up the final price of gasoline. in 2004, the average state tax on gasoline was $0.225 per gallon.
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In this essay, the author
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- Explains that while the u.s. is blessed to not be subject to volatility of food prices and allocation scares, it certainly has created some issues with food costs itself.
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- Cites morrison, d. (2006, september 18). retrieved may 11, 2008, from university of minnesota web site.
- Explains that society for science and the public, and ben harder, (2006). demand for ethanol.
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In this essay, the author
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- Explains the keystone pipe line is an oil transfer system that transfers oil from hardisty alberta to patoka illinois and eventually to houston texas.
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In this essay, the author
- Explains that oil originates in many countries and has a variety of factors behind its price.
- Explains that the most prolific countries when it comes to oil productions are in a group called opec. they have the power to set the price of oil but they don't have complete control of the market.
- Explains that the government can control inflation and gas prices through taxes. the average american needs to drive more as the u.s taxes oil much less than anywhere else and subsidizes its production.
- Opines that the american population is not wrong for not wanting to pay more taxes. the price of gas will hurt the us economy as people would have less money to buy things.
- Explains that the lower gas tax allows americans to live further out and afford suv's and large pick-up trucks that would be unaffordable in places like europe.
- Opines that the u.s. is in a potential world of hurt if oil spikes because of the cost for fuel rises.
- Explains that oil makes more things possible than most people know and has far reaching effects on countries.
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In this essay, the author
- Argues that america needs to be more conservative with the oil supply. being self-reliant on oil would lower the gas and diesel prices for individuals and business owners.
- Argues that the u.s. could be less conservative with oil by choosing to export oil to foreign countries.
- Explains that high oil prices in the u.s. are affecting american families and small businesses. they rely on people on vacations to earn their living.
- Opines that u.s. oil output will overtake saudi arabia's by 2020. treasury and risk nov.
- Quotes zezima, katie, to urge the state to intervene in the case of truckers in maine, feeling high costs of diesel fuel.
- Argues that america should stop importing and using oil from foreign countries for the production of fuels to benefit the american people.
- Explains that if the u.s. stopped importing oil, the demand for oil would rise, and jobs would be created in the oilfield.
- Explains crane, keith, and hanke, steve h. imported oil and u.s. national security.
1681 wordsRead More - Inflation and Oil Pricesexplanatory essayInlfation and Oil Prices Inflation refers to persistent increase in the price level over time and is one of the most dangerous threats to an economy because if unchecked it will erode the purchasing power of a currency and if the monetary system of the country is destroyed, can ultimateky force the indivduals to adopt foreign currency. There are two kinds of Inflation: Demand Pull and Cost Push Inflation. Cost Push Inflation: A situation when inlfation persists in the economy becuase of initial decrease in aggregate suppky caused by an increase in the rela price of an important factor of production i.e wgaes and energy. Oil Crisis of 1970 is a suitable example of cost-push(supply shock ) inflation.
In this essay, the author
- Explains that inflation is one of the most dangerous threats to an economy because if unchecked it will erode the purchasing power of a currency.
- Explains that cost-push inflation persists in the economy becuase of initial decrease in aggregate suppky caused by increase in rela price of an important factor of production i.e. wgaes and energy.
- Explains that short run aggregate supply is the relationship between real gdp and the price level. an increase in oil prices will force the producers to reduce the supply of oil in the economy.
- Explains that when the price of oil increases, producers will shft the supply backwards on account of high input prices. this leads to a serious situation of stagflation.
- Opines that increasing oil price will be a serious cocnern for the consumers. as the price of oil increases, consumers of gasoline will reduce their demand at higher prices.
- Explains that increase in oil price levels have a high correlation with inflationary pressures. if the price of oil increases, goods made or derived from crude oil will be expensive and add pressure on disposable income of consumers.
- Predicts that inlflation will continue for a long period of time and have the following effects on the economy.
- Explains that high oil prices directly increase the prices of goods made with petroleum products and will indirectly increase costs of transporttaion and manufacturing.
- Opines that a continued increase in price levels will reduce the gdp level and high unemployment along with increased price level.
- Illustrates the effect of rising oil prices/inflation on gdp and unemployment levels. the as-ad model shows a negative relationship between level of inflation and unemployment.
- Explains that inflation is a persistent increase in prices in the economy, which can devastate the purchasing power of individuals. it also affects the value of money.
- Explains that if the price of oil continues to increase, producers will be forced to continue reduction in supply in the market.
- Describes the possible causes and consequences of higher oil prices on the overall economy.
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In this essay, the author
- Explains that crude oil is a strategic product, and consumers must pay attention to the producers and export countries that can use it as weapons, such as during and after the 1973 arab-israeli war.
- Opines that the crude oil price collapse is symptomatic ominous for immediate economic outlook, since it is the main energy source for the world's industry.
- Explains that the west texas intermediate (wti) is the underlying commodity of new york mercantile exchange's (nymex) oil futures contracts.
- Explains that oil prices are falling mainly because of supply and demand aspect as the supply has increased from american new powerful production technology known as fracking, while the demand decreased due to the recession since 2008.
- Opines that if the stock market drops in price precisely because of the global economic outlook, why the oil fracking firms continue to their production plan?
- Explains that the us unemployment rate was not aggravated in recent years due to the hiring ability of the petroleum industry, but now this sector is starting to lay off its workforce.
- Explains that the u.s. crude oil inventories are the highest since 1982, and that financial investors take huge risks in a commodity market.
- Explains that the u.s. is the pioneer in crude oil and natural gas fracking technical revolution which strongly increases in the world's supply.
2196 wordsRead More - Analysis Of The Micro And Macro Economyanalytical essayThe increase in oil prices can also effect the supply and demand for goods other than oil, Econ made clear that the prices to produce them increase causes more of a economic issue. This is causing economic fluctuations and no one is doing anything to stop it.
In this essay, the author
- Analyzes how dr econ splits up the problems into two sections: the micro economy and the macro economy.
- Explains that higher oil prices tend to make production more expensive for businesses. this is the main focus of the pick n pay project.
- Explains that dr econ states that oil prices increases are going to lead to increased inflation and will in turn reduce economic growth.
- Explains that the increase in oil prices can also affect the supply and demand for goods other than oil.
- Explains that high unemployment rate, low growth, and high inflation are just a few of the problems that this constant increase is causing.
- Explains that pick n pay's competitor, shoprite, has told their customers that the prices of goods will only go down minimally while they are trying to drop prices in line with the local fuel price.
- Explains that 12 out of 20 people said they prefer to shop at pick n pay, and only one person chose shoprite. bread prices have been said to drop in 2009 and all wheat will too decrease price.
- Concludes that there aren't enough alternative suppliers to choose from in order for them to maybe find a cheaper supplier with the same standard of quality that they sell.
- Explains cosatu's big plan was to meet their biggest suppliers to find ways in which they can reduce prices for their consumers. one of the cashiers at pick n pay said in the questionnaire why she prefers them.
- Explains that although this source isn't up to date, it gives us a clear idea of what has been happening in the world around us.
- Explains that food manufacturers have not cut their prices proportionately, which could make a huge difference to some people out there that battle to even buy bread. heymans states that due to this increase, all businesses have had to re-evaluate logistics costs.
- Opines that pick n pay will affect not only them but the consumers that have to pay those increased prices. they will need to negotiate ways in which they can improve costs.
- Explains that the petrol price has increased 11% each year which is a very high number considering how it impacts our economy.
- Argues that businesses need to consider smarter ways of saving money and cutting costs, such as planning smart travel routes, choosing a closer supplier, considering alternate fuel options, etc.
- Opines that the increased fuel price could make south africa less attractive for foreign investors. businesses need to remain competitive and try and prevent it from jeopardizing their company.
- Explains that noble brought up the topic of getting "green" vehicles to help save our planet and save money at the same time. these smart logistics strategies can improve customer service and reduce pressure within the business.
- Analyzes how adele shevel argues that pick n pay is in a fragile financial position, forcing competitors to take advantage of it.
- Explains that pick n pay has an estimated profit drop of 34.4% but that hasn't stopped them. they're smart shopper card has attracted nearly 6 million customers because of the benefits that come with this loyalty card.
- Explains that pick n pay is expensive in comparison to other retailers, and only 5% said that it was. they offer so many benefits (especially to their employees) that people don't want to shop elsewhere.
- Explains that pick n pay is trying to adapt to these changes and mr ackerman says that they have now had to retrain their staff and introduce new people. evan walker is expecting a price war within the next few years
- Opines that pick n pay struggles to get back on track but according to their questionnaires, they haven't disappointed their customers.
- Concludes that as long as we stick with pick n pay, they will continue to do the best they can to fulfil our needs as a consumer.
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In this essay, the author
- Predicts stability in oil prices, unless there are big shocks in the global economy, or major developments disrupt oil supplies. the average price of a barrel of saudi crude oil is expected to be $71.
- Opines that inflation will not constitute a problem for the saudi economy, which is expected to reach 4.5% on average, even though it is considered high compared to the historical average.
- Opines that saudi interest rates will remain very low due to the pegging of the saudi riyal to us dollar.
- Explains that the saudi riyal will remain linked to the dollar despite the consensus that it will decline in the medium term due to stimulus programs, global imbalances, and diversification of holdings in central bank reserves.
- Explains that the saudi exchange stocks market started informally in the 1930's when the arabian automobile company was founded as the first joint stock company in saudi arabia.
- Explains that the saudi stock market index (tasi) has made steady gains since the start of the year despite low volumes and investors remaining cautious.
- Explains that the british economy suffered from the global crisis and entered recession in 2009. however, a large number of reports and experts believe that 2010 will be better and be the beginning of recovery.
- Explains the decline in global gpd growth rates due to the global financial crisis which began in august 2007; it is considered one of the most serious crises experienced by the world economy since world war ii
- Explains that the global financial crisis caused one of the worst investment downturns in history. investor confidence has improved, while economies remain weak, although growth is expected.
- Explains the saudi economy's high growth rate, greater availability of credit, and return to budget surpluses are expected to improve by 2010.
- Opines that the banking and petrochemicals sector will be the main drivers of the rising stock market.
- Opines that the petrochemicals sector will benefit from higher prices and production in 2010 with the earnings per share forecast to grow by 55 percent.
- Explains that london is considered one of the world's oldest stock exchanges and can trace its history back more than 300 years.
- Opines that an economic recovery will encourage the demand for metals and that rising volumes and commodity prices in 2010 will provide a solid base for earnings growth.
2284 wordsRead More