Oil Prices - Essay Example

Oil Prices Nathan: Oil is a fundamental natural resource that many countries cannot do without today. Its use as a source of energy drives many societies, economies, and countries all over the world. Although there are many forms of energy, the substitutability factor does not seem to avoid use of oil and related products. As a result, oil prices become critical to account for in any given economy. Moreover, the fact that oil is not readily available in all countries makes it a fundamental resource whose price level should concern any given economy that heavily relies on oil and related products.

Mary: Oil prices are undoubtedly essential to consider in the social and economic context. They are highly volatile and sensitive to the economic performance of oil producing countries. Due to the fact that economic growth and development calls for changes in the way an economy operates, fluctuations in oil prices are expected. However, poor economic performance does not necessarily have to be explained through the oil prices concept. I agree with the arguments made by both Nathan and Mary. However, the fact that oil is a fundamental source of energy does not imply that any given economic activity linked to oil prices is justified.

These prices can be regulated just like those of any other commodity in the economy. On the same note, the availability of substitutes introduces the competition factor. Through intense competition, oil operations can be managed alongside the price level of the oil. Daniel emphasized the need to focus on oil prices over time. He noted that oil prices go up more often than they decrease over a given period of time. This is economically explained by the observation that prices are sticky downwards.

According to Daniel, the activities experienced in the oil industry are informed by economic phenomena across the globe, whether or not it involves oil producing countries. Producers and consumers of oil interact in the markets, which are subject to the influence of economic factors. William concurred with Daniel’s argument, claiming that oil prices are critically influenced by economic activities around the world. His argument was explained by the American dollar value, where he said that a decline in dollar value will affect oil prices due to the fact that the oil industry values oil in American dollars.

Transactions in the oil industry are globally undertaken using the American dollar. In this respect the depreciation or appreciation of the dollar value will consequently affect oil prices. Jessica rapped up the oil prices argument by asserting that each oil-producing country should control its oil products in the way it deems necessary. She argued that United States imports oil from oil exporting countries despite the fact that the country has adequate oil resources and reserves that can meet domestic demand.

Just like the U.S, each country reserves the right to control and manage its resources. While I agree with Jessica, it is important to note that countries are hardly self-sufficient, thus the need for interdependence in the supply of commodities.