A Brief Note On The Global Price Of Petroleum Exporting Countries Essay

Due to the 2008 financial crisis, the Bank of England employed quantitative easing (an unconventional monetary policy used to stimulate the economy) by cutting interest rates down to 0.5 % and has been keeping it until now. The Bank made the decision to keep QE and the interest rate unchanged in March. Spare capacity (the ability of a firm to produce more of a product than is now being produced) is used by the BoE to justify its use of forward guidance policy (a communicative tool for monetary policy). Low interest rates improved the economy by increasing consumption and investment, which are the components of AD. The AD curve shows the total spending on goods and services in a period of time at a given price level. In constructing on AD

For instance, oil price increased at a higher rate in 2006 compared with 2005. Prices rose by 1.62 per cent in 2005 and 1.87 per cent in 2006. During this period, India's real growth rate in GDP also increased from 5.61 to 6.38 per cent. So did China's — from 9.18 to 9.76 per cent. But Russia's GDP growth rate decreased from 6.86 to 6.13 per cent, despite it being a major exporter of oil! This only goes to prove that oil prices are just one among many variables which can affect a significant metric such as GDP.

Several oil-countries have been facing economic and political turbulence as a result of the crash in oil prices, and there is disagreement among OPEC as how to handle the situation. (Krauss) While this is happening, America’s oil production continues to rise, as it inches closer to becoming an energy superpower in production and consumption; and countries that depend on their oil exports face recession.

economy can alter trends that can either aid or limit how well policies are helping the GDP grow. There has always been a lot of conversation on oil scarcity and drilling land for it. When resources are feared as threatened, they undergo structural changes. In this case, future oil will be more valuable because of its scarcity and the oil we have now will decrease in worth. This limits growth by decreasing value and causing a backwards shift in the specified market (Structural Change, 2007). Another structural change in the United States that has a long term effect of not only halting recovery from a recession but proving continuously problematic after the recession is employment structure. This is where there is a mismatch with the amount of eligible workers with the amount of available jobs. This can be caused by trade agreements such as allowing free trade which in turn decreased jobs in our country. Farmers can find themselves out of work with large food corporations offering lower prices in the market. This will increase unemployment therefore further stunting the recovery of an economic downturn (Amadeo,

Canada became a net oil exporter in the early 1980s and has since grown to become the world’s fifth largest producer of crude oil (US Energy Information Adminstration 2015). In 1981 Canada’s net trade surplus in energy goods relative to its GDP sat at around 0.6 percent and by 2000 it had increased to 3.3 per cent (Stuber 2001). Canada produces about 4.4 per cent of the world’s oil; owns close to 10 percent of the world’s oil reserves and consumes roughly 2.5 per cent of the world’s oil (KPMG-SECOR November 2013). The US is currently Canada’s top importer of crude oil, importing close to 37 per cent of oil in 2014 (US Energy Information Adminstration 2015).

Recently the price for the Canadian had drop drastically from. This was possibly due to the oil crash that occurred in Alberta. Due to the large supply of oil in the Middle East, the price of oil has dropped drastically, which meant that the price of oil in Alberta also dropped. Although the price of oil has lingered about $35-40 a barrel, the break even price is $70 a barrel. The oil crash that occurred in Alberta has brought grim news as unemployment in Alberta has increased drastically.

b) In the short-run, what will happen to the price level and output (real GDP)?

Based on the general indicator it would seem as though in the short term the economy is growing from the recession with a high level of real GDP growth of 5%. However, with the continuously increase in oil price may hold the overall economy from going well as expected. Moreover, the exchange rate for both UK and Canada that continuously appreciate against US may affect consumption by consumer and the operation of the company.

Discuss how rising oil prices might affect the macroeconomic performance of an economy. (25 marks)

Sometimes with an increase of government spending the real GDP increases as aggregate demand increases, there will be inflation due to the increase of the price level, but the real GDP will increase. With the oil embargo however, with the shortage of supply by the Arab countries, high inflation was also created but this situation was worse because now the real GDP was less. There could not be government spending at a rate fast enough to keep up with this new extremely high inflation, this situation was known as stagflation (stagnation and inflation), where inflation was high and economic growth was low.

The stock markets slowly rises as commodities rise. Also the inflation rate falls in order to reflect the situation of the market.

In this text, I concern myself with the contents of two articles based on recent microeconomics issues. During the last two months, the price of gas in the U.S. has been on an upward trend. Taking into consideration recent happenings on the international scene, this trend could have been triggered by many different factors. The articles I make use of in this case discuss the rising oil and gas prices.

Oil embargo in 1973 by the Organization of Petroleum Exporting Companies (OPEC) focuses attention on the energy crisis and results in increased demand for coal as a preferred alternative to oil in the United States Europe, and much of the rest of the world [Speight 2013]. At that time there were a large number of oil power plants in the world which had suddenly become very expensive to operate led to the introduction of larger coal-fired power plants [Jeffs 2010]. While Middle East countries which has the largest proven reserves of crude oil; fuel oil as well as crude oil are an available and economically feasible fuel in power and water desalination plants (Fig 1). For example, Saudi Arabia which has the largest known oil reserves in the world, consume annually more than 40 million tons of crude oil and heavy fuel oil [Husain and Ahmad 2015] in both sea water desalination and power plants. The produced ashes were collected using electrostatic precipitators installed in the major facilities and dispose into landfills. While Egypt consume annually approximately 7 million tons of heavy fuel oil in electric power plants to generate electricity, generation more than 4000 metric tons of oil ashes [Mohammed et al 2016]. All the Egyptian power plants are not fitted with electrostatic precipitators and situated in the densely populated region. In addition, most of the ashes are not used for anything but landfill. However, little attention has been paid to the environmental effect

World oil demand is increasing as emerging economies need more energy to increase their living standards. Estimates, shown below, are that by 2030, China and India as emerging markets will import over 70% to 90% of their fossil fuel needs (1) . Coupled to a continued high and growing demand for oil, makes this a robust market for the next 30 years.

In the chart, you can see that 2010 was more of a steady year in the economy and GDP percentage. It almost stayed the same throughout the year with a slight increase from the first to second quarter, then a slight decrease and increase coming into the third and last quarters of the year.