This essay critically assesses the situation on the global oil market, as the US government’s energy forecasting agency was to cut estimated global oil demand.
It was to happen due to the spike in prices of oil brought by the unrest in the Middle East in 2011.
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So if for example, we choose to use oil as source of energy instead of thermal or wind, we are trading off thermal or wind for oil as source of energy. Economics is also about cost and benefit analysis. This is because when we try to solve our economic problems and make choices, we look at it through economic perspective by comparing the costs and benefits of our choices. By using oil for energy source means that its costs and benefits are favorable over the other alternatives, thermal and wind sources. B. Market, Demand and Supply Just like any good in the market, oil demand and supply are affected by several factors in the market. Any change in its demand and supply will affect its price and its impact will be felt by the whole economy as well. 1. Market Market is simply a mechanism or arrangement which brings buyers or demanders and sellers or suppliers of a good or service into contact with one another (McConnell and Brue 2002, 49). In this article, we will be analyzing the oil market, meaning the mechanism or arrangement where the exchange happens between the buyers and sellers of oil. Buyers or demanders are the ones who are willing and able to exchange their money for oil. On the other hand, sellers or suppliers are those who are willing and able to exchange their product which is oil for money. 2.Demand The report cited that the EIA forecasted demand for oil is usually in the middle of OPEC and EIA demand outlooks. Demand refers to the quantities of a specific good or service that people are willing to purchase at any given price during a specified time period, given other things being constant (Miller 2004, 99). When taken singly, it is referred to as the...
This essay presents a comprehensive analysis of the factors, determining the oil price and its volumes of deliveries against the background of worsening political situation in the Middle East.
Market is simply a mechanism or arrangement which brings buyers or demanders and sellers or suppliers of a good or service into contact with one another. Demand refers to the quantities of a specific good or service that people are willing to purchase at any given price during a specified time period, given other things being constant. Supply is the amount of a particular good or service a seller or supplier is willing and able to produce and make available for sale at specific price and time. The total of all the supply available in a market will be the market supply
Prices affect market demand and supply but there are other factors present in the market that can cause changes and can determine market demand and supply.
The surplus in oil stocks was forecasted because the demand is at slower rate than the production. So, if the oil suppliers will continue producing oil at the same rate as before, they will be producing more than what the oil demanders are willing to buy from them. This situation will result to a surplus of oil in the market. To at least decrease the amount of surplus and bring the production near to equilibrium, OPEC members agreed to cut their supply by setting output quotas. The expectations about the future economic condition cause consumers to cut their spendings.
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The geo-political importance of the Middle East is surely reasonable and sound due to the fact that global oil market is dependent on its oil resources. Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates, Libya and Qatar are from those Middle East countries which have momentous amount of oil reserves which are not only enough for satisfying and their energy needs but are also an important source of export.
The author aims at examining the degree of volatility in the average market returns of the petrochemical industry through an estimation of the Security Market Line equation. Furthermore, he attempts to forecast future values that the industry adopts over a span of 6 months between June, 2011 and December, 2011.
Thus, the United States formulates its foreign policies in a way that will keep its fundamental interests like protecting its Cold War allies and maintaining its commercial ties with oil producing allies. This research paper is designed in such a way that it bring together fundamental approach and enquiry into the way the US adjusts its foreign policy system to maintain its interests in periods where there is a risk of major oil price hikes.
US have the largest economy in the world and have been using oil to fuel its economy. It has been depending on oil from the Middle East and this has been one of the things that have been affecting the relationship between the two sides. (Ariel, 2006)
There have been many instances in the history of the two sides when they have been adversely affected by this kind of dependence.
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.
The OPEC monopoly, the primary source of income to an already conflict-heavy region, the favorable relationship between countries like Saudi Arabia and major powers in the West such as America... all are in peril when peak oil
But the massive increase also observed in 2008 when it reached to more than $4 per gallon.
These dramatic changes in gasoline prices in USA are the result of many factors. Some of these factors are related to international changes and some are related
GDP of USA is $15,680 billion; making it 5.81 times the total GDP of the Arab League. Comparison of China with the Arab league leads to China’s GDP ranking as second. The GDP of China is 3.05 times the total GDP of the Arab league; as it was estimated to be $8,227 billion.
According to the report USA has proved greatest hunger for oil considering its earlier strategized influence and dominance of the Middle East oil reserves and elsewhere perceived to have substantial reserve of crude oil. Many countries known to produce oil especially in the Middle Eastern suffer from sluggish.
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