Economics - Crude Oil Market Analysis

High desiel prices are a consequence of capitalism. As all fuel prices have been going up people are blaming the federal govenerment. They believe the president has influence of derterming the outcomes of tensions betwwen Israel and Iran. Some people blame incrased prices based on fears around the world. It all comes down to one thing to blame, capitalism. Calitalism can be great to an economic system because of its emphasis on efficienc and inbradible success rate at allowing those who control the means of production and resources to meet the demands of those with purchasing power. Capitalism is constantly evolveing and will impact the gap between current and future goals on oil prices.

When people hear the word oil it is commonly interpreted as gas, but the oil that we drill is not what goes into our cars. The oil that is retrieved from the ground is called crude oil, Oil in its raw natural form and when it becomes refined it is used in plastics, rubber, and gasoline. ”Gasoline is a volatile, flammable liquid obtained from the refinement of petroleum, or crude oil. It was originally discarded as a byproduct of kerosene production.” The first oil well was found and harvested in Titusville, Pennsylvania by a man named Edwin L. Drake, in 1859. The well was about 70 feet deep (How gas). It pumped between 20-40 barrels a day

Crude oil comes from plants and animals that have died millions of years ago. The heat and pressure turns most of the materials into a thick dark oil called crude oil or it is also called petroleum. There are three types of crude oil: Heavy crude oil, which is found in Lloydminster and in Kindersley, medium crude, oil is found in southwest Saskatchewan, and light crude oil is found in Weyburn, Estevan and Kindersley.

The demand of gasoline has increased steadily over the last twenty years. In 1981 the U.S. averaged 6.5 million barrels of gasoline consumption per day. By comparison, in 2004 the U.S. averaged 9.2 million barrels of gasoline consumption per day. For most of this time period, gas prices stayed relatively the same. This is because the U.S. refineries increased their production to meet the demand and maintain the equilibrium price. Also during this same time period worldwide demand for crude oil increased 27%. Crude oil producers also increased their production to meet the demand keeping prices the same.

What is crude oil? Crude oil is found trapped in the underground rock; it is a natural occurring mixture of hydrocarbon compounds, cause from dead marine life and vegetation from millions of years ago. These materials had died and settled on the bottoms of streams, lakes, and oceans; where sediment had then covered this thick layer of organic materials, which applied heat and cooked this layer of materials to form what we now extract from the ground as petroleum.

United States domestic production has nearly doubled over the last several years, pushing out oil imports that need to find another home. Saudi, Nigerian and Algerian oil that once was sold in the United States is suddenly competing for Asian markets, and the producers are forced to drop prices. Canadian and Iraqi oil production and exports are rising year after year. Even the Russians, with all their economic problems, manage to keep pumping. There are signs, however, that production is falling in the United States and some other oil-producing countries because of the drop in exploration investments. But the drop in production is not happening fast enough, especially with output from deep waters off the Gulf of Mexico and Canada continuing to build as new projects comes online. On the demand side, the economies of Europe and developing countries are weak and vehicles are becoming more energy-efficient. So demand for fuel is lagging a bit.

Crude oil is used to produce transportation fuels, fuel oils for heating and electricity generation, asphalt and road oil, and the feedstocks used to make chemicals, plastics, and synthetic materials found in nearly everything we use today. According to the U.S Energy Information Administration, “about 76% of the 6.97 billion barrels of petroleum products that were consumed in the United States in 2014 were gasoline (47% of total petroleum consumption; includes biofuels), heating oil and diesel fuel 21%, and jet fuel 8%.” (pg.1) The Exxon Valdez was most likely transporting Class C crude oil to be used as gasoline and tar in California.

Energy efficient alternatives to oil, such as solar power and hybrid cars, have grown in popularity over the recent years. When gas prices were at an all time high, people began purchasing hybrid cars to cut gas costs. For example, from 2010 to 2014, sales in electric cars increased by almost 120,000 cars a year. As demand for electric cars rose, demand for oil decreased. Moreover, decreased consumption of oil in other parts of the world had led to less demand. Recent economic problems in China, one of the largest importers of crude oil, and developing parts of the worlds have led to an overall global drop in demand for oil. When a situation occurs where there is an excess amount in the quantity of a product compared to the amount of product that is needed, the price of the item drops. Similarly, as less oil is demanded throughout the world and a record number of oil is being produced, the price of oil is driven

Opportunity: • Increased consolidation. • Increase in consumption of oil globally. • High probability of discovering oil. Threats: • Political influence. • Low possibility of price increase.

Oil supplies thirty- four percent of the world’s energy needs. Oil is also a fossil fuel. This is because it is extracted from built-up organic material and fossils. Oil is mostly used as transportation fuel. It is also found found in many other products like fertilizers, makeup, paints, and fabrics.

Oil is used in many different ways besides gasoline. Many types of products worldwide consume oil. Plastics, rubber, tar, lubricates, asphalt, perfume and wax are just a few of the byproducts that come from oil. A barrel of crude oil, which is 42 U.S. gallons, will produce around

There are two primary factors influenced the market of energy: population and economic output (Exxon Mobil, www.exxonmobil.com). According to International Energy Agency (International Energy Agency, www.oilmarket.org) global oil product demand will rise up from 84.5 mb/d in 2006 to 86.1 mb/d in 2007, and in forecast for 2030 will grow 1.8% per year. The world oil prices are forecasted to decline from $68 per barrel in 2006 to $49 per barrel in 2014, then rise to $59 per barrel in 2030 ($95 per barrel on a nominal basis). Total world liquids consumption rises to 118 million barrels per day in 2030.

Political events in the Middle East saw Iraq invade Kuwait, as a result oil sanctions were applied to the output of both countries by oil consuming countries. Other oil producing countries feared of a major shortage in supply as prices rose from $18 to $40 a barrel; as a result other non-OPEC countries reacted by increasing production in oil. Prices fell back as overall supply returned to normal. Since the successful counter by the US to retake Kuwait, the price of oil has seen a steady drift downwards in price. This has also led to OPEC losing out due to more countries increasing production in oil; causing an increase in competition.

Oil prices have hit a record high at $100 a barrel. Prices have doubled from the rates seen in January 2007 and more than quadrupled since 2002. What factors are causing this unremitting increase and what are the likely consequences for consumers and the global economy? What is causing the latest price spike? This was triggered by concerns about violence in Nigeria and Algeria as well as the delay of the elections in Pakistan. The assassination of the former Pakistani

Crude oil is the raw material in petroleum industry which contains variable and complex hydrocarbons mixture. Oil refinery is a process where the complex mixture of hydrocarbons in the crude oil is separated and broken down in to standard fuels and non-fuel products. These products are diesel oil, gasoline, liquefied petroleum gas (LPG), heavy fuel oil, lubricants and bitumen. A refinery is a highly complex plant as it requires many auxiliary facilities, including large storage facilities for feedstocks and products and on-site services such as electricity, heat and cooling. Small refineries may produce only diesel, gasoline and heating fuels while large refineries produce the full