Oil 's Impact On The Economic Spectrum

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

Some emergent countries have put a lot of effort to find new reservoir or find the best way to recover oil from deep seas such as The pre-salt in Brazil. America has high projections for the future with fracking. However, lower prices would put at risk investments in unconventional sources. For example, tar sands, shale oil, deep sea and fracking. Our forecast is that the crude oil price tend to slowly rise until the market balance it self to avoid oversupply especially because of the weakening in the global oil

For example, the Intercontinental Exchange while oil prices have not been decided on by oil producers such as Niami refinery fires, Nigerian Pirates and global oil markets. The laws of demand and supply are also predicted by the increase and decrease in the prices of oil. Oil prices are driven by the increase in demand for oil which has limited or completely destroyed the gains for suppliers and producers. While the U.S still consumes more oil than any other country, it is evident from the increase in oil demand that developing countries such as China, India and Japan are driving oil prices higher by their continous growth in oil demand (Anderson, 1).

Fuel costs can change rapidly, making it difficult for consumers to adjust to the system. In fact, the petroleum industry is one of the

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

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.

Oil prices hike or drop is normally a major concern to researchers, industries as well as the government. Oil majorly affects the operations of all sectors of economy in any nation. From analysis and monitoring of oil prices, it has been observed that oil prices went down from the second half of 2014. This was unexpected because oil prices had stabilized for about four years with each barrel costing 105 US Dollars (Miller 11). According to a research and simulation done by researchers in 2014, there was a prediction speculating oil prices would remain low in 2015 and marginally rise in 2016. However, in 2015 there has been a very sharp decline of oil prices. It is out of this concern that this papers the aims at addressing the following questions.

The United States is the largest import of oil, which produces over 10 million barrels of oil each day. That a lot of oil that they are producing in my opinion. As the years have passed by we have gotten oil for our foreign country this happen in the Gulf War. We also need oil from other countries so in all reality we have to reserve all the oil that we get and make sure we keep up the rapport that we have with the other countries in order to keep the United States out of finically situations. In all we have to be safe about who we deal with and how we react, because we don’t want to cause any infractions with other people or countries and then have to pay for what we have done. “Even as Saudi Arabia diverges from U.S. foreign policy objectives

Oil prices affect most American's daily lives. Whether it is used to fuel your car, a plane, to heat your home, or even if it is just used inside products, like plastic that we use daily, oil plays a role in all of our lives. Last year, in 2015, an extreme decline in gas prices swept the United States. For example, oil prices have decreased to less than $30 a barrel which is the lowest it has ever been in 12 years. There are many factors that can contribute to this sudden decline in gas prices, but their are three that are the most relevant. These include, the recent advancements in other fuel sources, the changes in the leading oil suppliers of the world, and the simple economic concept of supply and demand. These three ideas are all important in contributing to the fall of gas prices.

However, recently, china’s economy has experienced a significant slowdown due to the shift in growth of the nation to rely more on private enterprise and domestic consumption. This shift in economy reduces its demand for industrial raw materials for manufacturing, which translates to a decrease in demand of oil for use in production plants. A survey of China 's industrial heartland identified decreases in key areas of new orders, export orders and output prices (Letts 2015). Furthermore, being the world’s second largest consumer of oil, this move that China makes will have

From different varieties and grades of crude oil, benchmarks are often used to set the prices. West Texas Intermediate (WTI) and Brent are two crude benchmarks that Canadian refiners often encounter. Brent is the leading global benchmark for crude oil prices because of its ability to ship to practically any oil receiving marine terminal in the world (Statistics Canada, 2013). Any geopolitical events that can possibly affect the supply and demand for crude oil will influence the price. As a result, crude oil prices in Canada are affected by foreign and domestic issues. For example, in 2005, Hurricane Katrina blocked oil production around the Southern Gulf Coast of the United States. As the supply decreased and the demand remained the same, oil prices over a barrel increased in a short period of time. President Bush sent thirty million barrels from the Strategic Petroleum Reserve (SPR) to bring the oil price down (Oil Price, 2009). Political problems in the Middle East have also caused many worries over the access of oil supply this region produces. In 2008, oil prices went over one hundred and thirty six dollars a barrel due to global concerns of the wars happening in Iraq and Afghanistan (Oil Price, 2009). The oil prices increased because buyers were afraid the oil was unable to be properly delivered. As these oil prices rise, consumers cut back on driving to save money. This decreased demand, which also decreased the

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

China is the world 's second-largest consumer of oil and the largest net importer of oil in 2014. China holds 24.4 billion barrels of proven oil reserves, the highest in the Asia-Pacific region. China 's total oil and liquids production, the fourth largest in the world, has risen by about 54% over the past two decades and serves only its domestic market. Oil sector has long been under state direct and dominated by national oil companies. The market is highly controlled by the government and oil price barely reveals the real costs of oil.

Rising oil price fuels stocks, NewsBank Newspapers – Australia and the World, 24 May, 2016, p. 26

Since the past few decades, owning a car has become a necessity in order to commute from one place to another. However, cars do not work automatically, they require fuel. Since the past decade, the petroleum industry has become one of the leading industries impacting the nation’s economy. Oil has become an essential commodity as it is utilized in transportation vehicles, serves as a raw material for manufacturing plastics, and is utilized in homes for cooking. America’s economy is greatly dependent on petroleum as it is the “black gold” of the nation. The considerable significance of oil has led to the drilling of it, which is not only limited to land, but also the oceans. Offshore drilling is a method in which petroleum is extracted from underneath the seabed. It is one of the significant technological advancements in the past few decades. However, the ones who are involved in the process of offshore oil production are humans, and humans tend to make mistakes. In 1969, due to a human error, an oil spill occurred and natural gas, oil, and mud shot up the well and oozed into the ocean (“Offshore Drilling”). The oil spilled led to an environmental disaster which killed thousands of marine animals and distorted the environment. In order to prevent the same error, the government passed a moratorium in 1981, banning more than 85 percent of the country’s oil drilling sites (“Offshore Drilling”). The moratorium restricted the United States to mass-produce its natural resource.