Oil And Food Commodities Prices
The analysis and investigation was undertaken using Principal component analysis (PCA) to comprehensively analyze the impacts of the macroeconomic index (fossil fuel prices) on the values of agricultural food products…
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To achieve this objective, this paper investigated the agricultural food prices for seven major farm products namely meat, oilseed, egg, rice, wheat, milk and sugar. On the other hand, the macroeconomic investigated were fossil crude oil prices, agricultural food prices indexes, GDP and consumer price index around Latin America as from 1963 to 2007. The study applied the use of Scree test and the magnitude of the variance method for measuring the optimal value of the common factors. The relationship coefficient that existed between the obtained principal function or component and the macro-economic index fluctuates between 0.87 for Latin America GDP and 0.36 for the consumer price index (CPI). According to the findings, agricultural food production index has the largest impacts on the macro-economic index and similarly the crude fossil oil has the greatest influence on the agricultural food production index and as a consequent, the prices of crude has a direct impacts and influence on the agricultural food prices in Latin America.
In the economic advancement process, food supply and its security are imperative issues. Therefore, food prices are an essential effective variable that have a direct effect on its supply and demand. Ever soaring food prices and cases of food riots across the globe and more important in Latin America have heightened concerns about the world food supply and food security. Food prices of major arable agricultural products
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Shell oil and Energy Company is a multinational whose parent company is the Royal Dutch Shell. The company has invested in the energy segment being one of the major players in exploration, extraction and sale of the commodity.
Early European settlers gave little notice to oil seepages in western Pennsylvania and New York, up until the mid-1850’s. That is when scientists discovered that they could procure kerosene from the crude oil. For the most part, wells were initially hand dug, with salt producers of the time learning to drill via cable tools.
Oil like Natural Gas, is a fossil fuel and takes million of years to develop. It’s called a fossil fuel because of its formational characteristics (Lee, “What is Oil?” Pg.1). The oil being consumed today was composed millions of years ago. The composure of such a commodity is actually a rather intriguing and unique procedure.
Crude oil is the primary raw material for other refined petroleum products such as gasoline and kerosene. Oil prices tend to fluctuate greatly and have far-reaching effects on the global market. Crude oil is so important a commodity that its price fluctuations in the international market may lead to rise or fall of economies, especially of the developing countries.
The rising costs are an outcome of the general level of inflation in the countries of Europe. Many big companies, particularly those, that are conducting operations across several countries in the world are now carrying out researches aimed at weighing the probable influence of the theatrical increase in prices of crude oil on their businesses (Wilson, 1975).
The oil blockade was not only meant to demonstrate these nation’s vibrant power that they had on the supply of oil products to the whole world but also to protest against the Western nations and US which took the side with Israel against Egypt in the Yom Kippur war which caused the increase of price of petrol from just $3 per barrel to $12 per barrel in the year 1973.
In the recent months, oil prices are certainly below their August 2006 peaks. However, there are still concerns that unless we carry out measures for cutting short demand for oil and create extra ability, oil price variability may continue to pose significant risks for the global economy.
One of the main reasons for a global recession is oil prices, which has seen wobbly fluctuations. The world is having increased dependence on oil, although many countries are trying to find alternatives to it.
According to the publication, "International Trade Statistics 2008" of the World Trade Organization, global trade was on the rise, but slowed down in 2007 due to weakening demand from developed economies (World Trade Organization).
In addition, oil has multidimensional facets comprising politics and diplomacy (Frynas, 2009:34). In essence, the subject of oil is very controversial and will remain among us until another source of energy usurps it, which is highly unlikely. Oil companies
Central banks that have sufficient autonomy from political dealings are typically associated with lower rates of inflation. Up to the twenties, the US used gold standard where people owned coins and the nation’s currency
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