Market speculators play a role because oil is a product to them that can be bought and sold based on instability of prices. Speculators try to forecast world events that could impact supply and demand. They buy contracts for oil to protect themselves from sudden increases in the price of oil and when prices rise, they can then sell their contracts that were purchased at a cheaper price for a significant profit (Herbert, 2008). Taxes also effect the variances in prices around the country. Refining oil to gas and transporting it to the marketplace also has a significant impact on the price of gas.
High and volatile oil prices affect economies at both a macro and micro level. For an Oil import dependent economy, the major direct effects at the macro level ar... ... middle of paper ... ...years. And therefore, the government has to retrieve administrative means. Another section of this Paper discusses previous oil pricing systems and steps implemented by Government of India for reforming Indian Petroleum sector market. Then the Indian Government & regulatory institutional layout with reference to current pricing of petroleum products to oil will be discussed.
They usually produce more when demand more and subtract when demand reduce to control the price of oil. Anyway, speculator is another factor we have to consider in short run. From demand side of view, every country is trying to reduce the consumption on petroleum, the government use tax strategy to control the oil price. Further more, government strategic oil reserves have to be considered as a factor which causes oil supply shortage. Next, let¡¦s discuss in detail how the demand and supply relation affect the price of oil.
Risk Management practices by Royal Dutch Shell plc Risk factors considered by Royal Dutch Shell plc Prices of oil, natural gas, oil products and chemicals are affected by supply and demand. Factors that influence these include operational issues, natural disasters, weather, political instability, or conflicts, economic conditions or actions by major oil-exporting countries. Price fluctuations can test our business assumptions, and can affect Shell’s investment decisions, operational performance and financial position. CURRENCY FLUCTUATIONS AND EXCHANGE CONTROLS As a global company, changes in currency values and exchange controls could affect our operational performance and financial position. ECONOMIC AND FINANCIAL MARKET CONDITIONS Shell companies are subject to differing economic and financial market conditions throughout the world.
From the middle of twentieth century, due to exceptional importance of the crude oil in the supply of the world's energy demands, it has become one of the major indicators of economic activities of the world. Even after the appearance of alternate forms of energy like solar power, water and wind, the importance of crude oil as the main source of energy still cannot be denied. This sharp increase in the world oil prices and the volatile exchange rates are generally regarded as the factors of discouraging economic growth. Particularly, the very recent highs, recorded in the world oil market bring apprehension about possible slump in the economic growth in both developed and developing countries. A large number of researchers proposed that exchange rate volatility and oil price fluctuations have considerable consequences on real economic activities.
The world concerned problem today is the energy problem. Among other reasons of its country is growing thirst for oil and gas made thus a matter of strategic energy security. Oil us the stratagem industry in the development of economy and societ. With the development phase of Kazakhstan’s oil resources is speeding, the word big powers seek the benefits here, Kazakhstan becomes the new focus of the world political and economic competition. From this essay firstly introduction of Kazakhstan’s oil industry, then examines the impact between the oil industry in the government invitation and the oil market, finally compare the pros and cons in government invitation then give the reason for government continued invitation.
From the middle of twentieth century, due to exceptional importance of the crude oil in the supply of the world's energy demands, it has become one of the major indicators of economic activities of the world. Even after the appearance of alternate forms of energy like solar power, water and wind, the importance of crude oil as the main source of energy still cannot be denied. This sharp increase in the world oil prices and the volatile exchange rates are generally regarded as the factors of discouraging economic growth. Particularly, the very recent highs, recorded in the world oil market bring apprehension about possible slump in the economic growth in both developed and developing countries. A large number of researchers proposed that exchange rate volatility and oil price fluctuations have considerable consequences on real economic activities.
The oil and gas businesses are fundamentally commodity businesses, which means they can be significantly affected by changes in oil, gas and petrochemical prices (ExxonMobil, 2014). ExxonMobil is also exposed to risks such as economic conditions: it is found that the demand for energy and petrochemicals is closely related to economic growth rates (ExxonMobil, 2014). Therefore, recessions or other periods of low or negative economic growth will generally have a direct adverse impact on the company’s performance (ExxonMobil, 2014). In addition, due to concern over the risk of climate change, a number of countries have adopted, or ar... ... middle of paper ... ...ging goals. Creating a proper risk management policy should be consistent with the company’s hedging objectives (Corley, 2010).
2.1 Oil Prices on Inflation Fluctuations in oil prices are usually found to have an impact on macroeconomic variables. A concern is the effect oil prices have on inflation. A number of studies have found a cause and effect relationship between oil prices and inflation. It is thought that a rise in oil prices tends to lead to a rise in inflation for many countries, due to its need as an input process for a variety of products. (Hooker, 2002) empirically analysed the effects of oil prices on inflation from 1962 to 2000.
For example, money supply and interest rate influenced stock price positively, while inflation influenced stock price negatively. Macroeconomic variables are considered good indicators for predicting and assuming the stock market direction and stock price other than financial variables. It is believed that macroeconomic factors which are publicly available can be used to make investment decisions and past information can be utilized to predict the stock market returns. Macroeconomic variables are important especially to fundamental investors to forecast future trends of stocks in order to make good investment. Macroeconomic variable such as inflation will affect the stock price due to the fact that inflation announcement often reduce the stock price and decrease the discount rate causing the value of the company to reduce, Monetary policy will also affects the stock market as it act as liquidity indicator and economic activity.