oil

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Will the Price of Oil Fall?

Readers Question: how could oil price possibly down? any supported theory? Oil prices could fall if: Supply Increases by more than expected. For example, maybe a country like Iraq or Iran has an unexpectedly large reserve of oil that they could easily start producing. This increase in supply would cause prices to fall. Note: it is notoriously difficult to predict how much oil is available, and some do say that Iraq has a lot of untapped supply. Market Sentiment Changes Not all movements in the oil price is due to basic supply and demand,…

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Should Government Try To Solve Shortages of Oil?

Should the Government intervene to deal with problem of Oil Shortages or is it better to leave it to a free market? As oil runs out, supply will shift to the left and the price will increase. Because demand is inelastic, oil firms will make increased profits. This creates an incentive for oil companies to discover new oil supplies. This research is often expensive, so the higher profits is beneficial for encouraging investment. There are many oil reserves which are difficult to access, e.g. oil in the Antarctic and Siberia….

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Oil Price Predictions 2008

The price of oil reached another record high yesterday – $125Brent Crude oil reached $126 US light crude oil reached $128 before setting back to $127This means that, even adjusted for inflation, oil is now close to the all time high, last reached in the 1970s. What are the reasons behind the Recent Increase in price of oil?Strong Economic Growth. In particular growth from China and India have caused increased demand for oil and related products Shortage of Supply. Speculation – People have been speculating on the continued rise in price of oil….

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When will oil run out?

Readers Question: when will oil run out? It is difficult to say. Firstly on the demand side, demand for oil is rising faster than many expected. This is largely being driven by rising growth in developing economies such as India and China. Today we consume an average of 85 million barrels daily. According to the most conservative estimates from the International Energy Agency that figure will rise to 113 million barrels by 2030. On the supply side the known reserves of oil varies between 1 trillion barrels and 3 trillion. Unknown Reserves The amount…

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Oil Price Predictions

It is pretty difficult to predict the future price of oil. There are many factors at work and it is hard to isolate any particular economic fundamentals that will determine the future price. Nevertheless in response to a readers question I posted a few factors which might keep oil prices above $100 for the next 12 months. Oil price predictions

opec-cartel-oil-price-1970s

OPEC Oil Cartel

Readers Question: The Oil Petroleum and Exporting Countries (OPEC) comprise the main oil procedures in the world. With the aid of diagrams show how OPEC is able to fix the price of oil on the world markets and comment on its recent activity in this area. Suggest what would happen if OPEC kept increasing prices rapidly over time. OPEC comprise over 50% of the world’s oil suppliers. Therefore, if they restrict the supply of oil it will have a significant impact on increasing price. (Diagram will be a simple supply…

War and the price of oil

War and the price of oil

Readers Question – When a war brakes out in middle east, the price of petrol rises, and the price 0f a used ford falcon falls why? When a war breaks out in the middle east, there is likely to be disruption to the supply of oil. 50% of our oil comes from the middle east, so if the countries are engaged in war then output is likely to fall and supply shift to the left causing price to rise. Even if output doesn’t fall, people may push the price of oil…

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The Most Profitable Company in the UK – Shell

But, do they deserve it? Last year, Shell made profits of $27.6bn (£14bn). This equates to profits of about £1.5 million per hour – which by any stretch of the imagination is not a bad hourly earning. The profits have been criticised by trades unions, environmentalists and motoring organisations. Motoring organisations claim that petrol is too expensive and it is unfair companies make such profit at the expense of the motorist. Personally, I think petrol should be expensive (for environmental reasons). But, also, Shell make the majority of their profits in the…