Economic Issues Independent Research Assignment

The reason of the fall in oil prices are the constant change of demand. The need for the oil is actually stagnant. Crude oil is becoming a product of the past. Today, you can harvest energy from solar, wind, water, heat, and waves. According to The Economist, “The use of fossil fuels in the rich world is mostly falling. Emerging economies are not currently taking up the slack”.

High oil price for last few years drove the energy industry to come up with a new technological innovation and the result is a new drilling technique like hydraulic fracturing. This new technology made drilling easy in North Dakota and Texas (Timiraos, 2014). With more oil drilled domestically, U.S became net energy exporter instead of an importer. Also falling demand due to energy conservation, more efficient cars, less demand in China and OPEC opted against cutting production levels made the price go down. When Global economic growth was slowing and most economists agree that both supply and demand played role in the last year oil price plunge. Driven by the increased supply, oil price dropped from $82 to $50 between Oct'14 and Jan'15. The IMF summarizes 58% of the drop in oil price to supply and only 42% to demand.

The U.S. was supposed to be the world’s new swing oil producer, able to nimbly open and close the taps in response to market forces, thanks to its bounty of shale fields.” In the past a barrel of oil has been one hundred dollars, recently it has dropped to thirty dollars. Though some wells can be profitable at low prices it puts a serious strain on the oil industry as explained in this article.

The supply for oil is way more than its demand, causing the prices over the U.S. to continually fall. The Federal Reserve plans on monitoring inflation, and they hope to get it to decrease back to its original expected

Until the above said period, the OPEC countries were the main producers of the natural oil and they worked as the cartel and they determined the quantity to be produced based on the market demand and they kept the price at a higher rate and prevented the fall of the price by reducing the production of oil. The introduction of the shale oil made the problem. The higher demand and lower supply of

The demand for oil has been predicted to increase despite the high price of oil. Sources of the demand for oil continue to increase with time worldwide. As countries industrialize and develop, their oil consumption increases together with their economy. Examples of countries that have their economy growing fastest and steadily are India and China. These two countries have their economy growing and the impact their economic growth has on oil demand is great. Some developed countries are also about to change their habits on oil demand. This will be likely adapted faster if the prices of oil continue to rise. Oil prices are determined by the traders and speculators who control and manipulate the future oil market (Anderson, 1).

Oil-The article”OPEC #1”explains the oil prices.The Oil of the Middle East is the price of oil has fallen by nearly half in just six months.Anyone who buys oil or gas is happy because the prices are low.Car and truck drivers, airlines, and shipping companies are all happy because they don't have to spend as much money on gas. Oil companies are not very happy. They are losing money.A barrel of oil now costs $58 and last summer it was $107.Oil prices have gone down and people are happy,at least some of

The article entitled “4 Reasons Why the Price of Crude Oil Dropped” by Evan Tarver offer some of the possible reasons. According to Tarver the strength of the US dollar could be one of the reason for drop in the oil prices. Tarver also reveals that Organization of the Petroleum Exporting Countries (OPEC) is unwilling to stabilize the oil market and this has an effect on the oil prices. Other reasons identified in the article include the oversupply of the crude and the declining of the demand.

From 2014, the crude oil price has dropped in a sudden since the global economic downturn, oversupply of crude oil and the appearance of new energy. Global economy fatigued, and thus the demand of crude oil was not strong,

Within the last year, oil prices in the United States have dropped significantly. As oil drilling in the United States has reached its highest level in over 30 years, consumers are reaping the benefits. Among these gains are record-low prices at the pump, and cheaper oil to heat homes. However, oil prices did not just drop on their own; multiple factors contributed to the fall. Increased domestic production, declining global demand, and competition from other oil-producing nations had led to rapidly dropping oil prices across the United States.

Shale revolution started about ten years ago due to technological developments such horizontal drilling and hydraulic fracturing. The increasing exploitation of shale oil significantly affected the oil market. In this report, WTI oil price was predicted over the next five years using historical data. A discussion of major factors that historically affected oil prices is presented. Historical events were linked to current and expected future events to evaluate the predicted prices. To further evaluate the forecasted prices, they were compared to the predicted prices by the Economy Forecast Agency.

What is causing the sudden decline in oil prices? A. There is an increase in the supply of oil but the demand has decreased due to interest in energy efficiency. a. The production of oil in the United States has doubled in the last several years (Krauss). b. The price for a barrel of oil is around $30 dollars compared to over $100 in 2014 (Bowler).

Looking at these figures we can see that with the demand the prices continued to rise. Also the war in Iraq contributed to the increase prices. If we were to look at the price of a barrel of crude oil today it would top all of these prior years at $71.17 a barrel.(tonto.eia.doe.gov, 2007) The problem is that the prices continue to rise while the income and wages of the American worker 's remains the same.

In 2016, the crude oil price movement prices were unpredictable. The OPEC reference basket dropped 10 percent to $43.22 per pound. The ICE Brent and NYMEX WTI both went down by 8.4 percent with ICE Brent at $47.08 per pound and NYMEX WTI at $45.76 per pound. This showed that there were uncertainties in the petroleum market. The future prices were predicted for 2017 that it would move higher. The World’s economic growth predictions was the same at 2.9% for 2016 but increased to 3.1% for 2017. Because of the 3rd quarter of 2016 in Japan and US, the OCED growth went from 1.6% to 1.7%. The demand for oil growth in 2016 has been increasing slightly to 1.24 mb/d. In 2017, the demand will be predicted with a decrease to 1.15 mb/d. OECD will

Crude oil is one of the most economically mature commodity markets in the world. Even though most crude oil is produced by a relatively small number of companies, and often in remote locations that are very far from the point of consumption but it is shipped all over the world. The global supply and demand determines prices for oil. Events around the world can affect the prices at our home for oil-based energy. OPEC, the large oil-producing cartel, does have the ability to influence world prices, but OPEC 's influence in the world oil market is shrinking rapidly as new supplies in non-OPEC countries such as U.S. are discovered and developed.