Economics : How Supply And Demand Are Affected By Controlled, And Can Be Manipulated Through Its Pricing Strategies

Since its discovery back in the year 1858 crude oil has been become one of the most sought after resources on the face of the planet. It is due to this fact that the oil industry has fallen into a rather odd category in the case of globalization and seeking out new markets, new labor and new customers. The reason being that the need for crude oil and fuel is always present therefore the product of oil in its basic sense sells itself and the companies do not have to go out and publicly advertise it in the sense that clothing lines and other commodities do. Oil companies must focus more on the matter of why an individual should buy their oil and along with other alternative fuels over their competitors even though in the end the companies

Oil is the product that each and every one of us use. It can be used for fuel, heating and even cooking. The most often known for unstable price is crude oil or gasoline. According to the The Economist, The main reason for price shifts of oil is oversupply. The oil production in Saudi rose 10.3 million barrels per day. This increase is the effect of a new method that I being applied to oil extraction. This method is called fracking, fracking is where they drill into tight-rock formations then gradually turning horizontal for several thousand feet more. This results to accommodations to multiple oil wells. This new approved method of oil harvesting has raised the productivity gains and reduced the cost of harvesting oil.

The consensus from the 1970s and 1980s was that there was an inverse relationship between oil prices and real economic activities. This belief later changed when the oil price crash of the mid-1980s failed to boost economic growth. Researchers then believed that increasing oil prices negatively affect the economy whereas falling oil prices have very little impact and by the 1990s this impact was assumed to be minimal (DePratto, de Resende and Maier 2009). More recently, researchers have found that increases in the oil prices adversely affect the economy whereas the impact of a decline in oil prices on GDP growth is only negligible (Jimenez-Rodriguez and Sanchez

This report will consist of the causes and consequences of the changing price of WTI crude oil and recent trends in the global price of oil. It will also include the effects of the ever-changing price of oil on individuals, business firms, governments and the economy.

Oil is a very important fossil fuel that is used for various sources of energy. Oil supplies power to industries, fuel for transportation, heat for buildings, and provides raw material for plastics, paints, textiles, and other materials (hybrid cars). To access this fossil fuel, oil drilling is used. Land-based oil drilling became less productive and as the global stipulation for energy increased, technology, law, and geology impacts stepped in and pushed the exploration of oil away from shores (CITE). With its historical background, offshore oil drilling is one of the most important aspects of today’s economy although we are faced with its risks and consequences, such as the BP Deepwater Horizon explosion of the Gulf of Mexico.

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

Oil is a limited commodity with an unlimited demand. Very few nations have the luxury of having their own supply to which they can fulfill their own needs, while other countries clamour for what they can get . The countries with oil realized instead of competing with one another on exports , it would be much more profitable to simply work together and cooperate in their production of oil, rather than compete. In doing this, these countries will then be able to influence the market magnitudes more.

markets since December of 2000, when the Commodities Futures Modernization Act removed it from the items regulated by the Chicago Mercantile Exchange and C.F.T.C. Without control, the price swings in step with the actions of speculators that do not take delivery of the commodity, but wager on the price of future delivery and then sell the contracts if the markup is positive for them. With so many players in the futures markets, the actual users of the commodity are forced to buy the oil on long-term contracts that allow them to benefit from economies of scale, by the size of the purchase, and they get a hedge against inflation by purchasing well in advance of their actual need. Industrial users of oil and its derivatives make contract purchases to lock in a level of supply for their needs, but whenever there is a spike in the price of oil, the industrial users will claim that the spike forced them to raise their prices. We gullibly believe it and some of us pay more and some of us stop buying. The present group is small, and nonexistent when it comes to gasoline purchases. We are addicted to our cars and driving, thus we know the link between oil and gasoline, and we are quick to accept that OPEC raised the gas price theory on the evening news. This long narrative is to tell you that as you look for the shift in the equilibrium point of price to demand, understand that the movement is human nature and not actual market forces. Honest price changes convey information about the product or its manufacture, or its shipping cost, or if a tariff has been imposed. In every case, the data is an honest statement of the burden of material or labor or transport or taxes that has been revealed. With oil, there are too many liars inputting data into the price system for their own benefit. The worst feature of oil is that it is priced by cartels and by speculators and that only by hedging our purchases can we stop the

Oil is one of the most valued products in the world—which means oil can be very inelastic. It is something that people need in order for them to keep their cars going and for many other reasons in this world. When the cost of gas drops down, the usual consumer’s response is positive, however, that might not be the case for some producers in the market.

In our recent history, oil has been the driver of the global economy. The advance of modern industrial civilizations was facilitated by cheap and abundant energy in form of fossil fuels. At present, oil accounts for about 40% of the primary energy source and natural gas contributes 23%. This statistic shows how much the world is dependent on oil. The dependence on oil is majorly in the industrial, transportation, and agricultural sectors. The use of oil as a fuel source is seen to have increased by around 50% over the last century. The energy needs have been observed in the daily activities of industry, private life, and commerce.

Crude Oil Industry is central to United State, its future and the world economy. Demand and Supply fundamentals have traditionally determined the price of crude oil. New price drivers have emerged with time. Complexity is on an increase in the oil market, having impact on the oil prices with a variety of factors. The fluctuation of oil price has reached an unprecedented level, with the world crude oil price widely swinging per barrel over the months. The prices reflect the crude oil price swings paid by customers for gasoline, furnace oil and diesel. Crude oil has its importance to United Stated and the world, the industries, governments and the public interested in knowing why there is a fluctuation in the oil prices (Plaut,

Crude oil is the one of the most important natural resource of the industrialised nations, which could generate heat, drive machinery and fuel vehicles and airplanes (years, someone). Moreover, the crude oil components are used to manufacture almost all chemical products, such as plastic, detergents, paints and medicines (years, someone). Also, it plays a significant role in expanding technical ability to discover new sources and extending the production lives of existing oil fields. Therefore, constant changes in the price of the crude oil have an impact on a global economy (years, someone).

The effect of the law of supply and demand is clearly demonstrated in the news article titled “Gas prices go below $3” (Isidore, 2014) which is closely related to the article “Oil prices are plunging. Don 't cheer yet” (Egan, 2014). We begin by analysing the supply of gasoline, which has been increased by several supply shifters. One of the factors is the increase in capacity of existing oil refineries, which produce petroleum (EIA, 2013). Another aspect is the improvements of refining technologies that allow more gasoline to be yielded out of the same amount of crude oil (GAO, 2005). Nevertheless, one of the most crucial supply shifters is the price of input which is, in this case, the price of crude oil that has recently fallen “below

In recent years, the fluctuations of oil prices have gotten the attention of the whole world. From $20s in 2003, it hit a mid-term peak of $148 in mid 2008, then fell to $30 during early 2009, and now back to $70-$80. Economic principles have demonstrated that the rise of oil price is a function of lack of supply and greater demand. We know that oil is lack of supply since there’s no major oil field found in the last 40 years and oil can’t be made within decades. However, the following conundrum has not been resolved: What are the key demand side drivers of price for oil? The price of oil depends on a variety of factors which leads to the increase of price. In summary,

From many decades oil is discovered and considered as the essential base in every part of people lives. It is the energy source and raw material that drives development. Oil is currently the most important commodity (EL-Sarif et. al. 2005). It is vital to transport (air, sea, road and rail) and also the production of goods for example, tar and plastic. With the demand for energy has risen relentlessly over the last 150 years in line with industrial development and population growth. Oil is the lifeblood of the modern world, and the combustion engines its indomitable heart. During the last century, consumption of products which are extracted from crude oil has increased significantly by a factor of 200 times as well as an unprecedented expansion of economic activity (Kashcheeva and Tsui, 2015). Recently, government of the countries that produce oil from all over the world are more interested in oil for many reasons such as: