Premium Essay

Oil Price Paper

In: Social Issues

Submitted By roberthewitt18
Words 373
Pages 2
The price in oil has dropped so much in the past 3 month, which is way better than it rising I would say. One reason it’s dropped is because the price of the barrel has dropped about $20 dollars each. It’s about 50 something dollars a barrel right now, it used to be about 70 something before June. It’s a good thing, but Saudi Arabia could push other competitors away because they’re the ones selling the oil cheapest. There is a lot of oil being made that is why prices are dropping because they have too much of it. A drop in prices mean they won’t drill as many wells for the oil, but that has yet to be seen. There will come a day though when the ‘boom’ in oil will end, just no telling when. We would all love it to go down and stay down but we know that never happens. Gas hasn’t been this cheap since 2009- 2010. Which is a long time coming. I hope it continues to drop I’ve never seen gas lower than 1.59 a gallon. I want to live to say I remember when gas was .99 cents boy. There is no telling what the price will be when we get 20 years down the road because I know there is going to have to be less oil. I wish they would come out with something soon that’s better than oil. There is a reason the earth needs that oil and if it’s all gone one day who knows what might happen to the earth. It isn’t just made in the earth for nothing that’s for sure. Even though gas has dropped companies just won’t pick up and leave because they have invested millions of dollars in the well they dig. In m Even though gas has dropped companies just won’t pick up and leave because they have invested millions of dollars in the well they dig. In my opinion I think the earth needs that oil to keep the lava going under the earth without it what is going to light it? They need to make vehicles run off of salt water because we know there’s plenty of that in the

Similar Documents

Premium Essay

Economics for Decision-Making

...500B Economics for Decision-making Final Research Paper: Oil industry Forecast Background The United States is one of the largest oil reserves’ country in the world. And its proven oil reserves was 227 billion barrels, ranked 11 in the world. More than 80 percent of the country's oil reserves are concentrated in four states: Texas (24 percent), Alaska (22 percent), Louisiana State (20 percent) and California (19%). Today, the oil industry is the largest industry in the world and accounts for over $3 trillion dollars in annual sales. Between 1950 and 1973 the world oil industry grew 9-fold – a rate of increase of 10% per year, sustained over a period of 20 years. During that time period, the world produced over 2.5 billion new motor vehicles, half of which in the United States. The five largest producers of oil are Saudi Arabia (10.37 mbd), Russia (9.27), United States (8.69), Iran (4.09) and Mexico (3.86). And now, International instability and rising demand have severely impacted prices, which reached an all-time high of over $70 per barrel earlier this year. Both domestic and foreign oil producers are relishing in high prices by posting record profits. The growing trade imbalance in favor of oil producing nations jeopardizes American long-term economic health. The current level of US national debt – $8.3 trillion – coupled with the Iraq War places the US in an extremely vulnerable position. Finally, unmentioned as of yet, is the rising threat of global warming...

Words: 1017 - Pages: 5

Premium Essay

The Effect of Energy Prices on Transportation and Storage Sector’s Equity Returns: the Iranian Case

...THE EFFECT OF ENERGY PRICES ON TRANSPORTATION AND STORAGE SECTOR’S EQUITY RETURNS: THE IRANIAN CASE by ABSTRACT The purpose of this study is to examine the effect of oil and gas prices on transportation and storage sector’s equity returns in Iran. To this end, we analyze Iranian transportation and storage sector index for the period from the first week of January 2005 until the third week of March 2010. Based on the multifactor model and using time-series regression, our findings indicate that oil price is not an important determinant of returns in transportation and storage sector. Similarly, the findings suggest that gas price movements do not seem to play a role for transportation and storage sector. However, consistent with the capital asset pricing model (CAPM), the market portfolio is a significant pricing factor in the sector’s stock returns. In addition, the estimated regression indicates that the exchange rate is not priced for this sector’s stock returns. The results of this study help domestic and potential foreign investors to understand the effect of energy price changes on transportation and storage sector stock returns in order to manage their portfolio effectively. KEYWORDS Energy prices, Transportation and storage sector, Equity returns, Iran INTRODUCTION Recent years have witnessed massive price movements of the energy markets. The price of energy has a large impact on economy of the world (Huang et al., 1996; Nandha & Brooks, 2009; Chen et al., 1986; Nandha...

Words: 4747 - Pages: 19

Premium Essay

Ikea: a Long March to the Far East

...m e p a g e : w w w. e l s ev i e r. c o m / l o c a t e / e n e c o Economic impacts of higher oil and gas prices The role of international trade for Germany Christian Lutz a,⁎, Bernd Meyer a,b a b Institute for Economic Structures Research (GWS), Osnabrueck, Germany University of Osnabrueck, Germany a r t i c l e i n f o a b s t r a c t The analysis concentrates on direct and indirect price increases, induced shifts in international trade and structural changes in the oil importing economies. The paper at hand asks, whether a stabilizing effect via international trade and domestic structural change on the GDP of oil importing countries can be observed, if a permanent oil price increase occurs. At least for Germany, structural change from consumer goods to investment goods industry and an improvement of international competitiveness limit negative impacts of increased energy prices. Analysis is based on the extensive and disaggregated global GINFORS model and the detailed INFORGE model for the German economy. © 2009 Elsevier B.V. All rights reserved. Article history: Received 15 July 2008 Received in revised form 13 January 2009 Accepted 27 May 2009 Available online 6 June 2009 JEL classification: Q43 C53 C67 F17 Keywords: Global modelling Energy prices and the macro economy International trade 1. Introduction Oil price shocks have negative impacts on oil importing countries. There seems to be evidence for this plausible result from the literature of econometric...

Words: 5593 - Pages: 23

Premium Essay

Deprication of Indian Rupee

...The Indian Rupee Crisis Economics Essay-1 In this paper we are going to examine the cause and the impact of rupee depreciation on the Indian economy. Since last few months Indian rupee came under great stress as overseas investors are paring their exposure to Asia’s third-largest economy amid international uncertainty and mounting worries over the domestic economy. In 2009 – 2010 the exchange rate was hovering around the 43 – 45 rupees per US Dollar level. And now it is around 55 – 56 levels, the main reasons to examine are increase in import bill, higher inflation, fiscal mismanagement and all resulting in higher cost of borrowing. The rupee has lost more than 15% of its value this year, making it one of the worst performing currencies in Asia. This paper reviews the probable reasons for this depreciation of the rupee and the outlook for the same. It also reflects on the policy options to help prevent the depreciation of the Rupee. This paper will firstly discuss about the economy of currency to give an overview of the problem and the factors related to it. Afterwards it will be examining the causes of the Indian rupee depreciation with respect to the Indian economy and the global economy. And after that it will analyse the impact of the same on trade and business. Finally, recommending the policy actions in response of the falling currency. II. LITERATURE REVIEW: These papers include the work which have been used as a basis or reference for formulating the policies regarding...

Words: 3340 - Pages: 14

Premium Essay

Foreign Exchange Market

...Policy Analysis Unit (PAU) Working Paper Series: WP 0807 Transmission of International Commodity Prices to Domestic Prices in Bangladesh M. Golam Mortaza Habibour Rahman June 2008 Policy Analysis Unit (PAU) Bangladesh Bank Head Office, Dhaka, Bangladesh (www.bangladeshbank.org.bd) (www.bangladesh-bank.org) Policy Analysis Unit* (PAU) Working Paper Series: WP 0807 Transmission of International Commodity Prices to Domestic Prices in Bangladesh M. Golam Mortaza Research Economist Policy Analysis Unit Bangladesh Bank Habibour Rahman Research Economist Policy Analysis Unit Bangladesh Bank June 2008 Copyright © 2008 by Bangladesh Bank * In an attempt to upgrade the capacity for research and policy analysis at Bangladesh Bank (BB), PAU prepares and publishes Working Papers on macroeconomic issues as a part of its routine activities. These papers reflect research in progress, and as such comments are most welcome. It is expected that these papers would eventually be published in learned journals after undergoing due review process. Neither the Board of Directors nor the management of, or any agency of the Government of Bangladesh necessarily endorses any or all of the views expressed in these papers. The latter reflects views based on professional analysis carried out by the staff of Bangladesh Bank, and hence the usual caveat of research reports applies. [An electronic version of this paper is available at www.bangladeshbank.org...

Words: 9792 - Pages: 40

Premium Essay

Diversification of Income Resource in Saudi

...Diversification of Income Resource in Saudi Arabia as Result Decrease Oil Price Names Institutional Affiliation Abstract The main objective of this paper is to study the idea of diversification of the income resource of Saudi Arabia due to the effects of the instability in the oil market. Saudi Arabia as a country has developed due to its oil source which makes it the kingpin in the world oil market. Approximately 85% of the country revenue is earned from the oil economic sector. This is a sign of over reliance on the oil market making the country economy vulnerable because of changes of oil prices. The instability of the oil prices in the global market has signaled the need for economic diversification to build a stable economy (Shoult, 2006). This paper discusses the possible ideas which can be used to up bring diversified economy which does not depend on a single or few sectors of income generation. Introduction Saudi Arabia is a country that is located in the western part of Asia. It is the world largest producer and exporter of petroleum products. The economy of Saudi Arabia has in the past been pivoted on the oil as source of revenue due to the fact that the strength of the economy, foreign investor’s ideas and development of the infrastructures were all dependent on the oil. Fluctuations in the oil prices and demand in the world market has greatly affected the economy of Saudi Arabia and well as a source of livelihood to the majority of the citizens. The country...

Words: 1429 - Pages: 6

Premium Essay

Business and Operations

...men and setting off the largest oil disaster in U.S. history. Its impact would reverberate well beyond the Deepwater Horizon and the families of the eleven men who died, and even beyond the people and places of the Gulf of Mexico. Known as the BP spill, this tragedy seemingly was not an isolated incident. According to Juhasz (2011), “BP was not a lone actor; rather, this tragedy was the predictable outcome of an industry that has pushed well beyond its own technological capacity and beyond the government’s ability to regulate it” (p. 2). This oil well disaster has had important ramifications for the future of our country. In order to tackle the nation’s energy crisis, there must be an establishment of an orderly transition from crude oil to an affordable, sustainable energy future. The purpose of this paper is to explore ways of converting crude oil to consumer fuels. The paper will examine Marathon Oil’s product process and give a determination as to which phase shows a need for the greatest efficiency improvements. In addition, the paper will address the retail price of gasoline and its relation to the world’s demand for crude oil, as well as what Marathon can do to keep the gas prices the same without losing profits even if global crude production is decreased by 10%. Finally, the impact of a continuation of a deep-water drilling moratorium on U.S. gas prices will be addressed. Marathon Crude Oil Supply: Phase 1 Marathon Oil Corporation is a global corporation...

Words: 1555 - Pages: 7

Premium Essay

Oil Rents

...Do Oil Revenues Affect Taxation? Christopher Skutnik Oil is an essential commodity to humans, as it powers many goods and services that give us humans a lot of utility.  For oil producing countries, the prospects of exporting barrels of oil can be very exciting for fiscal revenues.  The effect of oil production on fiscal revenues is largely due to the world oil price.  In the last year and a half the price of oil has plummeted from $104/barrel to about $41/barrel today.  This sharp decline in the price of oil has certainly hurt fiscal revenues of oil producing countries.  It is also very likely that these countries do not enforce taxation.  On the other hand, due to the volatile nature of oil prices, it is also rational to assume that oil-producing countries may enforce stringent tax codes.  Stringent tax codes may be enforced to relieve budgetary pressures that may be as a result of lower oil prices.  The purpose of this paper is to determine whether oil revenues have an effect on taxation. Understanding the effect of oil revenues on taxation is very important in terms of real world application.  The information obtained from the analysis between the two variables will enable large producing oil nations to determine the kind of fiscal policy to undertake.  It will help nations in planning budgets accordingly, while also helping governments determine whether there needs to be a change in tax rates to meet budgetary ambitions.  For example, if...

Words: 1680 - Pages: 7

Premium Essay

Exxon Mobile

... Abstract The basis of this paper is to examine the past and most recent development of Exxon Mobil. This research will highlight key study points including history, supply and demand, price elasticity, cost of production, competitive advantages, entry barrier, product substitution, market share and structure. Various information used for this study are company history statements, SWOT analysis, and financial reports. The story of this giant oil company has become more intriguing with the every increasing demand for oil, oil-powered products, driving global production nearly to 5.3 million barrels a day. This paper will investigate alternate energy and how the world is slowly gravitating towards that shift. Company Introduction In our economic day and age, there is a high reliance of oil and gas in everything used in daily task. From cooking, to driving cars and keeping warm during the winter season, it is one of the essential necessities in current modern time that keeps the human race thriving. It is used in the production of certain home and household materials. Gas is used in producing fertilizers and a wide range of industrial products, including plastics and polymers, textiles, paints and dyes. In this study there will be a focus on one-of-world’s largest oil companies – Exxon Mobil and examine the corporations’ economic value. What is Exxon Mobil? Exxon Mobil, as we have stated previously is one of the largest companies in the oil and gas industry. Exxon is the...

Words: 3117 - Pages: 13

Premium Essay

Market Structure

...Colorado Technical University December 4, 2014 In my first paper I wrote about gasoline. The oil market/industry has a major effect on gas prices; therefore I chose to write about this industry in my second paper. The oil industry is large and one of the fastest-growing manufacturing industries. 1. Which of the 4 classes of "Market Structure" comes closest to describing the current state of the market? The structure of the world oil market is set to be an Oligopoly industry as the oil market is dominated by few large suppliers. For an industry to be classified as an oligopolistic industry it has to have a small number of relatively large firms that are mutually independent, and which hold a very large amount of output. Also, an oligopolistic industry has differentiated or standardized products, and non-price competition is very important among firms selling differentiated products. In addition the barriers to entry are very difficult, because not every country can produce oil, and therefore cannot enter the oil market, and take advantage of the abnormal profit. The profit of firms is determined exactly in the same manner as in other forms of markets: from optimum quantity where marginal revenue equals marginal cost, price is determined on the demand curve and unit cost on the average total cost curve. However, this determination may be affected by the kinked demand curve. The kink in the demand curve at price P and output Q means that there is a discontinuity in the firm's...

Words: 932 - Pages: 4

Premium Essay

The Role of Oil Futures in Risk Management

...FInTHE ROLE OF OIL FUTURES IN RISK MANAGEMENT From: To: Senior Management - Airlines Company November 2011 0 University of Westminster - Westminster Business School International Risk Management COURSEWORK THE ROLE OF OIL FUTURES IN RISK MANAGEMENT Student: Student ID: Course: Word count: MSc. Finance and Accounting 2557/2617 1 EXECUTIVE SUMMARY In the world today, oil is being used as the main source of energy for a lot of core industries. Due to its non-renewable characteristics and the global rising demand, oil has increased in its value, which results in many oil price crises recently. For all those industries using large amount of oil in operation, the risk of rising oil price is an extensive problem. The most efficient method to hedge against this risk is by using oil futures contracts. Because of its effectiveness, oil futures contracts are playing a key role in risk management for a number of industries including transportation and manufacturing. This report provides principal knowledge about oil futures and its role in hedging the risk of oil price volatility. A case study of US airline industry with most updated data obtained from Bloomberg system is also discussed, which suggests the effectiveness of oil futures in risk management for most airlines companies. However, in some case, the inflexible use of oil futures may create a burden in financial costs while not producing effectiveness in risk hedging. 2 TABLE OF CONTENTS LIST OF...

Words: 3635 - Pages: 15

Premium Essay

Relationship Between Economic and Financila Sector Development

...DEPARTMENT OF ECONOMICS AND FINANCE COLLEGE OF BUSINESS AND ECONOMICS UNIVERSITY OF CANTERBURY CHRISTCHURCH, NEW ZEALAND Conditional Correlations and Volatility Spillovers Between Crude Oil and Stock Index Returns Roengchai Tansuchat, Chia-Lin Chang, Michael McAleer WORKING PAPER No. 4/2010 Department of Economics and Finance College of Business and Economics University of Canterbury Private Bag 4800, Christchurch New Zealand WORKING PAPER No. 4/2010 Conditional Correlations and Volatility Spillovers Between Crude Oil and Stock Index Returns Roengchai Tansuchat1, Chia-Lin Chang2, Michael McAleer3 January, 2010 Abstract: This paper investigates the conditional correlations and volatility spillovers between crude oil returns and stock index returns. Daily returns from 2 January 1998 to 4 November 2009 of the crude oil spot, forward and futures prices from the WTI and Brent markets, and the FTSE100, NYSE, Dow Jones and S&P500 index returns, are analysed using the CCC model of Bollerslev (1990), VARMA-GARCH model of Ling and McAleer (2003), VARMA-AGARCH model of McAleer, Hoti and Chan (2008), and DCC model of Engle (2002). Based on the CCC model, the estimates of conditional correlations for returns across markets are very low, and some are not statistically significant, which means the conditional shocks are correlated only in the same market and not across markets. However, the DCC estimates of the conditional correlations are always significant. This result makes it clear...

Words: 11901 - Pages: 48

Premium Essay

Le Cirque

...impacts of oil price shocks 1.4.1 A short history of a controversial topic Since the 1973 OPEC (Organization of Petroleum Exporting Countries) oil embargo, the role of rapid, unanticipated increases in oil prices has been a topic of intense interest, among both economists and the lay public. Considering the magnitude of widespread national recessions during the 1970s, the controversy surrounding research on the macroeconomics of oil price shocks may seem surprising: why would anyone doubt the capacity of oil price shocks to cause the major movements in GDP (Gross Domestic Product) which have been observed in so many countries? Possibly most important in fueling the controversy is the small share of GDP that oil and its close substitutes have comprised in most economies: 1.5% to 3% prior to the 1973 episode. Experienced macroeconomists doubted that even a sizeable shock to such a small part of the economy could have the observed effects. Second, the 1973 episode itself was not a clean experiment because a number of other major factors were emerging at the same time. The world economy was just getting off the post-Bretton Woods fixed exchange rate regime. A number of countries, including the United States, was teetering on the brink of recession at the time of the 1973 shock; in the United States in particular, monetary policy tightened right around the time of the 1973 shock. Separating these effects and deciding the role of oil price shocks in post...

Words: 4409 - Pages: 18

Premium Essay

Oil Pricing

...An Anatomy of the Crude Oil Pricing System Bassam Fattouh1 WPM 40 January 2011 1 Bassam Fattouh is the Director of the Oil and Middle East Programme at the Oxford Institute for Energy Studies; Research Fellow at St Antony‟s College, Oxford University; and Professor of Finance and Management at the School of Oriental and African Studies, University of London. I would like to express my gratitude to Argus for supplying me with much of the data that underlie this research. I would also like to thank Platts for providing me with the data for Figure 21 and CME Group for providing me with the data for Figure 13. The paper has benefited greatly from the helpful comments of Robert Mabro and Christopher Allsopp and many commentators who preferred to remain anonymous but whose comments provided a major source of information for this study. The paper also benefited from the comments received in seminars at the Department of Energy and Climate Change, UK, ENI, Milan and Oxford Institute for Energy Studies, Oxford. Finally, I would like to thank those individuals who have given their time for face-to-face and/or phone interviews and have been willing to share their views and expertise. Any remaining errors are my own. 1 The contents of this paper are the authors’ sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its members. Copyright © 2011 Oxford Institute for Energy Studies (Registered Charity, No. 286084) ...

Words: 14848 - Pages: 60

Premium Essay

Forecasting of Commodity Prices

...Forecasting and Analyzing World Commodity Prices René Lalonde* Principal Researcher International Department Bank of Canada Zhenhua Zhu Economist Research Department Bank of Canada October 18, 2002 Frédérick Demers** Economist Research Department Bank of Canada Abstract This paper develops simple econometric models to analyze and forecast three components of the Bank of Canada commodity price index (BCPI), namely non-energy commodity prices (BCNE), the West Texas Intermediate crude oil price (WTI), and other energy prices. In the paper, we present different methodologies to identify transitory and permanent components of movements in these prices. A structural vector autoregressive (SVAR) model is used for real BCNE prices, a multiple structural-break technique is employed for real crude oil prices, and an errorcorrection model is constructed for real prices of other energy components. Then we use these transitory and permanent components to develop forecasting models. We assess our models’ performance in various aspects, and our main results indicate: (a) for real BCNE prices, most of the short-run variation is attributed to demand shocks, (b) the world economic activity and real U.S. dollar effective exchange rate explain much of the cyclical variation of real BCNE prices, (c) real crude oil prices have two structural breaks over the sample period, and their link with the world economic activity is strongest in the most recent regime, (d) real prices of other energy components are...

Words: 9822 - Pages: 40