Why The Price Of Crude Oil

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

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

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.

As most of the world knows oil prices have been plunging downwards since June 2014, in which a barrel of oil has fallen more than 70 percent from that time, was $90- $100 a barrel, now $40 a barrel and approaching $30 a barrel. This fall basically came about due to rapid increase in global oil production which started to exceed its global demand therefore forcing prices down. “Earnings are down for companies that made record profits in recent years, leading them to decommission more than two-thirds of their rigs and sharply cut investment in exploration and production. Scores of companies have gone bankrupt and an estimated 250,000 oil workers have lost their jobs.” (Krauss, 2016).

The reason oil has such a great demand is due to the fact that there is no other equivalently cheap and powerful energy source available to complete this country’s task in vast quantiles of production. However, over the last year the price of a barrel of oil reduced from one hundred dollars to the mid forty dollars a barrel where it

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).

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

With the current spike in oil prices, many American consumers have asked, 'what is going on?' In order to fully understand the current situation and how it is affecting the economy one must look at a variety of factors including: the history of oil crisis in the United States, causes of the current situation, and possible outcomes for the future. It is only after meticulous research in these topics that one is prepared to answer the question, 'what is the best possible solution to the oil crisis?'

During this period, the price of ‘Brent’ crude oil (like WTI) reached an all time high in July of 145.61 USD/BBL in response to strong economic conditions prior to the Global Financial Crisis hitting in early 2009. The price of ‘Brent’ crude oil also similarly bottomed out in 1970, with a record low of 2.23 USD/BBL and following the GFC, prices sharply fell, with prices at 62.04 USD/BBL as of April 2015. Over the 45-year period, significant events such as the GFC, the Iran/Iraq war, the Iranian revolution and various OPEC cuts (as shown in graph 1) has caused the price of ‘Brent’ crude oil and crude oil as a whole to historically be fairly volatile and as such, these various political and economy-wide factors provide an explanation for volatility in prices over the past 45 years.

The world’s pricing mechanism of petroleum is determined by OPEC (Organization of the Petroleum Exporting Countries) and is quantified by barrels of crude oil. At peak, price of crude oil is USD147.27 per barrel in July 2008 following concern of an impending missile test by

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

At the same time, fluctuation of the crude oil price has put pressure on the price level and economic growth in China. In this research I ask: “What is the interaction between crude oil price and China’s economy?”

Aside from the 2008 crisis, prices of oil have never been cut in half in a matter of months since 1900 – until just recently in 2014. What might’ve caused this steep decrease in prices? Well, it appears as though the surge in US oil production had a primary role in breaking the market. Meanwhile, demand had remained fairly stagnant. Extensive federal intervention into the United States’ oil and gas markets began back in 1930s and continued well through the

This paper seeks to evaluate oil price volatility by examining the trend of oil price from 1970 to 2013. Attempts will be made to explain the causes and root factors influencing price changes. Finally, a view on whether oil price volatility is inevitable will be established.