Short Run And Long Run Effects

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.

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

Diverse and multi-faceted, the Canadian business market is one of the strongest functioning mixed market economies in the world. Within the Canadian economy, the oil and gas sector stands as one of the largest and most influential sectors. The oil and gas industry is unique as it affects almost every person and sector of the economy worldwide, whether it is through commodity or material input costs. In Canada, this growing industry could allow for the country to be the one of the “biggest energy producers in the world” leading to a massive paradigm shift globally.

Oil price increases are generally thought to increase inflation and reduce economic growth. In terms of inflation, oil prices directly affect the prices of goods made with petroleum products. As mentioned above, oil prices indirectly affect costs such as transportation, manufacturing, and heating. The increase in these costs can in turn affect the prices of a variety of goods and services, as producers may pass production costs on to consumers. The extent to which oil price increases lead to consumption price increases depends on how important oil is for the production of a given type of good or service.

In order to ensure a reduction in the impact of rising crude oil prices on our company, we will take several actions to ensure that the impact of crude oil prices will not be more affected. First, we will raise the selling price by a small amount to compensate for the loss of government contracts. By raising the price to make up for the losses caused by the financial. Of course, this method has a certain risk, because if the increase is too large, the buyer may not buy from us here, so this can only micro-adjustment, can not improve too much. Second, we will need to control costs, starting from most places to ensure that can make up for financial shortfalls. Third, we will communicate with customers, such as we will take a range range of price fluctuations, and customers that will not exceed the range will not fall out, so that customers have a psychological bottom line. Thus ensuring that traffic will not lose. Fourth, we will be a large sum of money and bank loans, this is a last resort. Not to the last minute try not to use, although the reality may not be ideal. We can increase production in this way, and when prices fall, we can hedge, so that when prices rise, can produce more revenue to

The oil pipelines are a very costly project, which would eventually bring in large amounts of revenue that will positively impact the economy. The Canadian Energy Research Institute estimates that “2.1 trillion in gross domestic product would be added to the Canadian economy” if the pipelines were to be implemented (Carlson & Mendelsohn, 2013, p.13). If Canada were to approve the proposal of the oil pipelines, it would become easier to transport the oil, making the “price difference between Canadian and international benchmarks smaller” (Carlson & Mendelsohn, 2013, p.13). This means that oil would be able to be sold at a high price, increasing the revenue that Canada receives (Speer & Green, n.d.). It is believed that the pipelines are “critical to the Canadian economy as they can turn the Canadian oil producers from price takers to price makers in international markets” (BC Chamber of Commerce, 2014). As well, they have projected that Canadian oil production is to “double more than six million barrels per day” (BC Chamber of Commerce, 2014). Currently there are many bottlenecks during oil transportation to other countries, besides the United States due to poor infrastructure. This means that Canada is compelled to sell the oil at a lower price which “costs the economy up to $50 million a day, which is $18-$19 billion a

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).

For the last seven years Canada has become the top provider for oil to the united states edging out Saudi Arabia, its this need to produce oil on a large capacity that is fuelling the destruction of the surrounding

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.

Canada is similar to the US in its market-oriented economic system, production, and standards of living. Canada’s economy grew steadily from 1993 through 2007; however, due to downturns in the global financial markets, Canada’s economy followed suit. By the end of 2008’s meltdown, Ottawa experienced its first financial deficit in twelve years. “Canada’s major banks, however, emerged from the financial crisis of 2008-09 among the strongest in the world, owing to the early intervention by the Bank of Canada and the financial sector’s tradition of conservation lending practices and strong capitalization” (CIA, 2015). Canada achieved some moderate growth in 2010-14 and plans to balance the budget by the end of 2015, despite the recent drop in oil prices. Previous growth in its dealings with the U.S. have made Canada the world’s fifth-largest oil

Canadian is a major oil producer within the world. Therefore, any oil related news or research should be intriguing for the Canadian economy. Would a rise in oil prices instantly lead to more oil production within Canada? How much oil is too much oil for Canada? Is producing from the oil sands safe for Canada’s environment? Rising oil production (from rising oil prices worldwide) would definitely help that the Canadian oil industry. However, one must remember that a large amount of Canadians do not see the benefits

Gasoline is a essential resource to most family’s daily life. The price of oil has plunged dramatically and reached the level that was last seen during the recession of 2009, even though it has started to bounce back a little bit. Brent crude, the international benchmark of oil price, was around $53 a barrel at the end of January 2015. The constant decline of the oil price may have affected all oil-producing countries, including Canada. The experience of plunging oil price and deprecation of the Canadian dollar lead me to analyze how Canadian economy was hit or benefited by low oil price.

Falling oil prices leads to a fall in the price of gasoline which is derived from oil. Subsequently, consumption of gasoline rises as Canadians benefit from lower oil prices. In fact, The Conference Board of Canada (Bernard 2015)estimates that the average household would save close to $1000 in 2015. This has a direct impact on the Canadian total CPI basket in which gasoline account for about 5% of total CPI (Bartlett 2014).

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

It is hard to know for sure, but a rational guess is that the effect will be like a major downturn or depression. Gasoline is will become very expensive (well above $12 a gallon or more) and its availability will be very limited. Workers will be laid off from work and imported goods will be nonexistent, all due to the influence of the oil shortage on the economies. Fuel prices may not rise as high as $12 gallon; the tricky problem may be that at lower prices than $12 gallon, oil prices send the economy into recession. There might in fact be a superfluity of oil stock because of this downturn or depression, and because of that, many will not be able to afford the high priced