Supply and Demand - Example of Oil Price - 1384 Words

PRINCIPLES OF ECONOMICS Assignment Group members Nguyen Dat Anh Ho Ngoc Son Nguyen Thai Ha Nguyen Thi Huyen Trang Luyen Trung Kien Article’s link: http://news.bbc.co.uk/2/hi/7048600.stm Wednesday, 2 January 2008, 22:36 GMT What is driving oil prices so high? 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†¦show more content†¦Gasoline prices are hovering not far below the $3-a-gallon mark in the US, while UK petrol retailers have warned prices could soon rise above  £1 a litre. But on the other side of the fence, oil giants such as ExxonMobil and BP are having a wonderful time, while oil-rich countries are also smiling. Oil wealth has underpinned President Hugo Chavezs efforts to reshape Venezuela, allowing him to fund extensive social programmes and reject US criticism of his policies. Russias oil and gas bon anza has underwritten efforts by President Vladimir Putin to exert state control over the countrys energy sector. Where will prices head next? Many people scoffed when analysts from investment bank Goldman Sachs said in 2005 that prices could eventually top $100 a barrel. All of the factors that pushed us above $80 are now moving us higher, said Peter Beutel at Cameron Hanover in Connecticut. Until we get more supply or demand starts to take a hit, there is no reason we cant see any number. PART 1 1. Demand for Oil was increased due to: - Strong economic growth in countries such as China and India created more factories and more cars that need more oil to run them. - In 2008, fearing that conflict between Iran and Iraq cause further cuts in supply, many oil brokers increased purchases in order to lock in suppliers at current prices. 2. Supply for Oil was increased for the following reasons: - OPEC decided to raiseShow MoreRelatedThe Core Concepts Of Economics1241 Words   |  5 PagesIntroduction The two factors Demand and Supply are the core concepts of economics. Demand states the quantity of a product one requires to fulfill his needs at particular price stand. On the other hand supply refers market offering of a product at specific price level. There are numerous constituents that affect the Demand of a product. For example Price, availability of alternative products in market, price of the alternative products, buyers’ income, buyers’ purchasing power parity, number ofRead MoreHow Oil Price Affect World Economy1292 Words   |  6 Pages1. Introduction The price of oil becomes the bone of contention recently. Oil price seems to be hitting new highs with the regularity of a metronome. It is a bad news for customers who have to pay more on it. More frightening still, this situation may get worse before it come back to normal. No one can exactly predict when the pendulum will soon swing back again since all uncertain factors existing. From the supply side of view, the OPEC is the main producer, being prepared to add or subtract productionRead MoreOil Prices: Demand and Supply1496 Words   |  6 PagesOil Prices: Demand and Supply 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. SomeRead MoreThe Price Of Oil Prices1521 Words   |  7 PagesThe price of Oil has inflated over the years as the fossil fuel is slowly running out, there has been a rise in prices as supply falls. When a commodity becomes scarce its price will rise. The price has also risen as demand has increased from countries like China who are producing more goods which are demanded by consumers. Price change over 25 years This shows the price fluctuation from the year 1990. This shows that there was a large increase in price from 2007 until 2008. Following thisRead MoreThe Economic Impact On The Economy995 Words   |  4 PagesOil is a huge part of everyone’s everyday life. From transportation to heating homes and businesses, oil prices are always dramatically changing due to the constant change of supply and demand. The economic impact that the price of oil has on the U.S economy continues to rise and fall due to political instability. Americans especially have a heavy reliance on oil, especially on foreign origins. The increasing price of oil has spiked large concerns and has become a major global debate. Many sourcesRead More Supply and Demand of Oil Essay1390 Words   |  6 PagesOil is an essential resource in the whole world. People use oil in a variety of ways. The world has used oil for many years and it will still use it as a basic commodity. Oil use can be traced back to 1850s. How ever, when Edwin Drake produced commercially usable quantities of crude oil from a 69-foot well in Pennsylvania in 1859, he marked a new period that considered oil as a valuable commodity. Oil prices have been inconsistent since 1859. The discoveries of more wells considerably lowered oilRead MoreEconomics : Physics Of The Production And Consumption Of Goods And The Transfer Of Wealth1504 Words   |  7 PagesMacroeconomics: Macro economics on the other hand, takes a much broader view by analyzing the economic activity of an entire country or the international marketplace. DEMAND AND SUPPY: The Law of Demand: The law of demand states that, â€Å"if all other factors remain equal, the higher the price of a good, the less people will demand that good†. As such, the higher the value, that bring down the amount requested. The measure of a decent that purchasers buy at a higher cost is less in light of the factRead MoreGm 545 Project Paper 1726 Words   |  3 PagesBusiness Economics GM545 January 2013 Everyone’s Gasoline Problem The fluctuation of gas prices occurs because of a number of factors; the price of crude oil, the price of manufacturing, the price of corn is all tied to the price of oil and the price we see at the pump for gas. In 2011, the United States consumed about 134 billion gallons1 (or 3.19 billion  barrels2) of gasoline, a daily average of about 367.08 million gallons (8.74 million barrels). This was about 6% less than the recordRead MoreMicroeconomics Is A Branch Of Economics1715 Words   |  7 Pageslimited resources. In today s oil market, there is always the problem of what drives the high and low prices. Demand and supply in market relationship is mathematically represented by the price, quantity and other information about. Oil price reacts to the quantity demand and produced; thus the article of Clifford Krauss on May 23, 2014 â€Å" As Summer Driving Beckons, Gas Prices Are All Over the Map† is an example. Krauss’s article focuses on the different price of gas in the different States ofRead MoreSupply And Demand of Gasoline Essay1018 Words   |  5 PagesSupply and Demand: Gasoline I am a husband and a father of four lovely children. We need a large vehicle to haul all of us around town. And of course I would do anything to keep them safe and I always want to provide them with the best. Therefore, after the birth of our fourth child two and a half years ago, my wife and I decided to upgrade our Ford Explorer to a Ford Expedition. We got everything from the side-curtain airbags to the TV and DVD player. What we did not know was we also purchased