...Oil and Gas Prices Darlene Dant COM 150 In August 2006 the American national average for a gallon of gas was $3.09. Gas prices hit an all time high in July 2008 with a national average of $4.12 per gallon. By December 2008 the national average for a gallon of gas was a mere $1.61 (GasBuddy, 2009). Due to the affect that supply and demand has in combination with state and federal taxes, America has seen significant fluctuations in gas prices. As people say, “What goes up must come down” and, in the oil and gas industry the opposite is also true, “What goes down must come up”. Fuel costs are affected by the world’s oil supply. The Organization of the Petroleum Exporting Countries (OPEC) consists of 12 members from various countries, who are the main suppliers of the world’s oil (OPEC, 2009). According to the Energy Information Administration (EIA [2009]), America gets the majority of its oil from five countries: Canada, Venezuela, Mexico, and Saudi Arabia. There are different grades, or qualities, of crude oil. Two of the most popular grades are: light-sweet crude oil (better grade) and heavy-sour crude oil (lesser grade). Depending on where the oil is coming from, it may be of a better, or lesser, grade compared to that of another country. The most desirable crude oil is light-sweet crude oil. While easily obtained in the past, light-sweet crude oil is becoming less available, causing an increase in price (Wagner, 2008). While light-sweet crude oil may have...
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...1. Everyone’s Gasoline Problem. We are all familiar with fluctuating prices of gasoline at the pump. Why does this happen? Research the recent history of gasoline pricing in your area, and attempt to relate any fluctuations you observe to documented supply and demand factors outlined in our book. Be sure to cite any references used. * Gasoline prices rise and fall depending on supply and Demand. Gas prices are impacted by a number of factors, each individually placing its own pressure on our overall energy system. Some affect the price of crude oil and others affect the cost of producing and marketing gasoline, but combined, these factors greatly impact the fluctuation of gas prices that we experience on a daily basis. Changes in crude oil prices - Crude oil prices are determined by worldwide supply and demand, with significant influence by the Oil Producing and Exporting Countries (OPEC) as they determine how much oil to produce and sell to other countries. The more crude oil OPEC chooses to produce and release, the lower the price. Additionally, because oil is traded in a world market, events in remote areas affect the price of crude oil for almost everyone. In recent years, worldwide events that have impacted gas prices include: Decisions by the OPEC cartel to raise production quotas slowly and reluctantly after having reduced them in 2002. * An increase in worldwide demand for oil, including unexpected demand growth in China, India, and other quickly developing nations...
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...Effect of Rising Gas Fuel Prices The rising cost of gas worldwide has effected all people in numerous ways. People use different types of gas to fuel vehicles, heat their homes, or to cook meals for their families. One reason for the rise in the price of this resource stems from the lack of oil refineries used to produce gas. Fewer refineries leads to less of the product that is manufactured. When there is a high demand for a low turnout product the price usually tends to be higher. Another reason that the prices for gas and fuel to rise could be linked to weather conditions. Not only does it affect the shipment of crude oil, it also takes a toll on the oil rigs in the ocean. Along roadways storms may cause delays in an expected shipment of gasoline, or propane to stores. Other Natural disasters, such as earthquakes and hurricanes can also cause the shutdown of oil rigs, or the transportation of crude oil by ship to refineries. This again, shortens the supply of gas and could in turn raise prices. Furthermore, oil producing countries also control the price of gasoline in different ways. Taxes and embargos on crude oil, tariffs, and how much oil a country is willing to export are all major factors when gas prices are set. War in these countries can also affect the production, distribution, and consumption of this major resource. When a country is at war, it tends to use more, and produce less oil, or even raise the price on any oil it exports. Gas and fuel are almost...
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...Demand And Supply Of Crude Oil 10/10/2009 Introduction Crude oil is a naturally occurring substance (i.e., “Fossil Fuel”, formed from organic remains over a period of millions of years) found in certain rock formations in the earth. It is a dark, sticky liquid which, scientifically speaking, is classified as a hydrocarbon. This means, it is a compound containing carbon and hydrogen, with or without non-metallic elements such as oxygen and sulfur. Crude oil is highly flammable and can be burned to create energy. Derivatives from crude oil make an excellent fuel. Uses Different types of oil that are obtained from crude oil are as mentioned below: 1. Ethane and other short-chain alkanes 2. Diesel fuel (petro diesel) 3. Fuel oils 4. Gasoline (Petrol) 5. Jet fuel 6. Kerosene 7. Liquefied petroleum gas (LPG) 8. Natural gas Certain types of resultant hydrocarbons when mixed with other non-hydrocarbons, create other products like: 1. Alkenes (olefins), which can be manufactured into plastics or other compounds. 2. Lubricants (produces light machine oils, motor oils, and greases, adding viscosity stabilizers as required). 3. Wax, used in the packaging of frozen foods, among others. 4. Sulfur or Sulfuric acid. These are useful industrial materials. Sulfuric acid is usually prepared as the acid precursor oleum, a byproduct of sulfur removal from fuels. 5. Bulk tar. 6. Asphalt 7. Petroleum coke, used...
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...Shomo September 13, 2014 Situation C Last night about 7pm, I went to fill up on gas at the closest gas station by my home in Merrillville, Indiana. The Speedway gas station had gas for $3.49 a gallon for regular unleaded gas. Midgrade gas was $3.69 a gallon, Premium was $3.89 a gallon, and Diesel was $3.89 a gallon. I always try to fill up before the work week, as I do not want to get stuck in Chicago, Illinois where I work, and have to fill up on gas. Gas prices are dramatically different in my 40 mile radius. Today, gas prices in Chicago off my exit for work are $3.99 a gallon for unleaded gas at the Marathon gas station at the corner of South Blue Island Ave and Western Ave (Gas Prices in 60608 Zip Code, GasBuddy). That is 50 cent savings per gallon. If I just filled up 10 gallons, which is a savings of $5. It doesn’t sound like much, but I used to fill up twice a week on my about 46 mile commute to work. For the month, that would be an estimated savings of $40 if I do not use my vehicle for anything else but work. Now my cousin Edgar, who is always thinking about the next get rich scheme, is thinking about possibly opening up two gas stations. He believes that he will make a good profit if he also sells convenience items at both of his gas stations. He found out I was taking this Economics course and figured I would be happy to help him research his idea of opening two gas stations in the area. I wasn’t too thrilled, as he always is trying to find get rich...
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...same question, why do gas prices fluctuate? There are millions of articles, blogs, news reports and people complaining throughout the world about gas prices. People really want to know the answer to this question and unfortunately there is no clear cut answer. After my research one thing that seems constant is that the gas prices are rising but the amount of increase is not consistent throughout the country. Even within the same state the gas prices varies. I leave out my house and the gas is $4.29 per gallon. I drive 4 miles to a suburb and the gas is $3.83 per gallon. I drive across to the neighboring state and the gas prices are $3.69 per gallon. I live in the city of Chicago, IL and every year the city is voted to have the highest gas prices in the country. When I saw the first question it was a no brainer because I really want to know why our gas prices top the national average. I am going to discuss the factors that affect the prices of gas around the country and focus on the city of Chicago. There is no one factor that contributes to the rise of gas prices. The fluctuation of gas prices can be contributed to a combination of factors. Some of the factors that have been seen throughout my research are the price of crude oil, increase in demand, distribution network breaks, refinery capacity, and taxes. The Oil Producing and Exporting Countries (OPEC) determine how much oil to produce and distribute. OPEC attempts to stabilize the prices of crude oil but the supply has stagnated...
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...Economic Profile on the Oil and Gas Industry The oil and gas industry is one of the most talked about industries today, at least in my town it is. Everywhere I go I hear people talking about the rise or fall in gas prices or how the cost of a barrel of crude oil has just gone up or down .10 cents. I also hear about how the current hurricane season could pose a threat to the oil industry, as it did last year with hurricane Katrina, putting oil refineries under water or causing extreme damage to them. In this essay I am going to discuss the shifts and price elasticity of supply and demand in the oil and gas industry. I am also going to discuss the oil and gas industry’s positive and negative externalities, wage inequality, and monetary and fiscal policies. Lastly, I will discuss the economic affects and influence on the oil and gas industry. Shifts and Price Elasticity of Supply and Demand The price elasticity is the affect of the price for a good on the demand of that good. If consumers are not affected by the change in price then this good would be referred to as inelastic. If consumers are affected by the change in price then this good would be referred to as elastic. The oil and gas industry is inelastic when the prices rise because, although consumers slightly reduce their consumption of oil and gas, consumers still purchase oil and gas. With gasoline prices in the U.S. approaching an average $3 a gallon, Americans are moaning about the rising cost, but so far they are...
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...Patisy Salifu SAPAD133 Economics (ECF1110D) The Oil and Gas sector includes the oil and gas extraction industry as well as petroleum refining. The United States is the world's third-largest petroleum producer, with more than 500,000 producing wells and approximately 4,000 oil and natural gas platforms operating in U.S. waters. Together, oil and gas supply 65 percent of U.S. energy. The nation's 144 refineries process more than 17 million barrels of crude oil every day. Oil and gas production facilities include 16,000 establishments with a value of shipments of $134 billion. Natural gas is seen as a good source of electricity supply for a number of economic, operational and environmental reasons: it is low-risk (technically and financially); lower carbon relative to other fossil fuels; and gas plants can be built relatively quickly in around two years, unlike nuclear facilities, which can take much longer. (“Oil and Gas”, n.d.) Oil prices have risen while natural gas prices have soared. Using the supply and demand models, this essay analyzes the change in price from an economic point of view. The price of oil rose 1 percent Thursday as stockpiles declined and new indications that demand is rising in the U.S., the world's largest crude consumer. The price of natural gas soared nearly 5 percent to close at $4.46 per thousand cubic feet — the highest price since July of 2011 — after the government reported a huge draw in supplies...
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...greatest number of efficiency improvements, and I will explain further. In addition, I will discuss the relationship between the retail price of gasoline and the world demand for crude oil. I will try to discuss how Marathon could keep the price at the pump the same without losing any profits – even if global crude production has decreased by 10%. Finally, I will discuss President Obama’s June 2010 deep-water drilling moratorium. It was originally for six months; I will try to determine the impact of a continued moratorium on deep-water drilling for retail gas prices in the U.S. WHICH OF MARATHON’S PROCESSES CAN BE IMPROVED THE MOST? A business needs to be at least as efficient as its main competitors, in order to be able to compete and survive in the long-term. A more efficient business will produce goods at a lower cost than competitors can supply. A more efficient business can generate more profit, possibly at lower prices. (Tutu2u.net) In analyzing Marathon’s product processes, there are areas that are open to a large number of efficiency improvements. Particularly, the world will run out of oil sometime in the distant or near future. Both Marathon as a company (and the United States in general) has to explore and find oil more efficiently so that the use of oil as a resource can be optimized. Therefore, that is the area of the oil production process that could be improved the most. A new source or field can change the whole game in terms of the other processes down...
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...other resources such as crude oils, natural gas, coal, renewables, and uranium (nuclear). One area in particular I want to touch on is the creation of electricity. Therefore for the purpose of this paper I will discuss the advantages, and disadvantages of the resources required to produce electricity, their lifecycles, and economy and trade. Power generation is a viable source of producing electricity, and the fuel to support it. For example: Crude Oil - A small percentage of this resource is used in power generation as compared to other sources . Crude oil is pumped from underground reservoirs by drilling rigs, and refined . After the refining process its then transported by ships, pipelines, trucks, or trains for consumption or storage at chosen power plants. At the power plant the crude oil is used in different ways for fuel; such as burning the oils and using combined cycle technologies to produce steam which moves the turbines within the plant. Combined cycle technology is the most efficient way to burn oil at the power plant. The use of crude in power generation does not come free, and it must be purchased in the commodities market at the best price available so the utility can resell it to the consumer at an affordable price. To achieve this price energy traders must enroll in an exchange traded crude oil future contract. This contract binds the utility to take delivery of a specific amount of crude oil at a predetermined price which helps consumers and...
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...Why Gas Prices are higher in California than in other Parts of US English 123 James L Hicks Embry Riddle Aeronautical University Abstract The rising gasoline and oil prices have become a global concern since petroleum has many uses around the world and yet its prices have continued rising for the last sixty years. This paper sought to find out why gas prices are higher in California than in other parts of America. The literature reviewed showed that West gasoline market dominated by California is defined by tight balance between supply and demand. Other factors found to be contributing the escalating gas price in California include isolation of the state from other refining centers, market conditions including international demand, Wall Street speculation, poor policies leading to uncontrolled oil cartels, decline of oil production during technical failure, political interferences, and increasing prices of crude oil due to demand forces. Despite there being no quick solution to the challenge, temporary measures such as efficient use of the available resource while looking for alternative cheaper source of energy could alleviate the challenge. Why Gas Prices are Higher in California than in Other Parts of US The Rising gasoline and oil prices have today become a world concern (Garrington, 2012). More concerns are raised considering that petroleum is an important product whose price continues escalating for the last sixty...
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...2014 Project I The price of gasoline fluctuates due to the price of crude oil. Gasoline is made from crude oil (found in the earth). Gasoline prices have been on the rise due to increasing crude oil prices. West Texas Intermediate (U.S) and Brent Crude (World) are two of the most important crude oil market suppliers (Dent & Sakurai, 2014). These organizations crude oil price is mandated by the Organization of Petroleum Exporting Countries (OPEC). Private business owner for gasoline stations seeks a higher maximum profit per gallon when prices increase. But, when the price of gasoline increases it affects the economy. Consumers are hit with a tight budget on their finances to sacrifice a gallon of gas. As, prices increase gasoline stations become competitive; usually prices are slightly close. Driving within my city, I notice that station prices are higher or lower, and as I research the topic gasoline it gives me a clearer understanding. It’s noticeable that the same amount of vehicles is at each station. From personal opinion, I believe it depends on the location (which side of the highway) and brand name. I’m a consumer that is more concerned with price; therefore if the station on the other side of the highway is offering a lower price, I’ll go the extras to get that price. Grocery stores have made it convenient for consumers to save at the pump, by turning one’s grocery bill into gas points; also wholesale warehouses are giving consumers’...
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...Production and Operations Management Marathon Oil Corporation (Marathon Oil) is an integrated international energy company. It is engaged in the exploration and production of crude oil and natural gas, as well as in the domestic refining, marketing and transporting of petroleum products, integrated gas business and oil sands mining. The company’s principal operating subsidiaries include Marathon Oil Company (exploration and production) and Marathon Petroleum Company LLC (refining, marketing and transportation). Its principal operating locations include the US, Equatorial Guinea, Libya, the North Sea, Angola, Indonesia and Canada. The company headquarter is in Houston (Texas), the United States of America. The first part of this assignment will thoroughly discuss the Deepwater Droshky Project implemented by Marathon Oil. The next paragraphs will discuss how the prices of crude oil and retail gasoline relate to each other, as well as the nature of this relationship. Afterwards, the assignment will discuss the methods Marathon uses to keep its pump price in equilibrium, even when crude price rises. This assignment ends with a discussion on President’ Obama’s deepwater drilling moratorium, and how oil companies can overcome the prohibition of deepwater drilling and stay competitive. Marathon Oil - Deepwater Droshky Project Marathon Oil Corporation (2010) had announced its Droshky development in the deepwater Gulf of Mexico to have begun operations on time and under budget...
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...Rising Gas Prices COM/215 Luis A. Garcia June 20, 2011 Pamela J. McGlynn Rising gas prices This essay will show the effects of rising gas prices and how they will be at an all time high in the up coming years. One will read various viewpoints from United States Government officials, Law officials. One will also show how this raise in gas prices will have an impact on businesses and how the consumer will be affected in the long run. Gas prices are on the raise because of unrest in the middle east and because of this it directly affects the cost we pay at the pump to fuel our vehicles. The first viewpoints come from an article published by ABC news. The article was written by Maggy Patrick and Linsey Davis, They interviewed a former executive from the Shell Oil Company this executive is anticipating that gas prices could reach five to six dollars per gallon by 2012. is the founder and CEO of a nonprofit origination called Citizens for Affordable Energy, John Hofmeister was named president of a Houston-based Shell oil company in 2005 until he retired from the company in 2008, said he predicts the hikes by November 2012 due to the increase for gasoline worldwide. He also stated: (Sloan, 2011). “While demand is rising steadily, the world is struggling to increase production. Demand is approaching 90 million barrels per day, while only 85 million barrels are being produced. Today, gas prices are averaging at...
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...familiar with fluctuating prices of gasoline at the pump. Why does this happen? Research the recent history of gasoline pricing in your area, and attempt to relate any fluctuations you observe to documented supply and demand factors outlined in our book. Be sure to cite any references used. Fluctuating gas prices are caused by a number of factors. The combination of the price of crude oil and the cost of producing and marketing gasoline have greatly impacted the fluctuation of gas prices that we experience on a daily basis. Crude oil prices are determined by worldwide supply and demand, with significant influence by the Oil Producing and Exporting Countries (OPEC) as they determine how much oil to produce and sell to other countries. The more crude oil OPEC chooses to produce and release, the lower the price. With an increase in worldwide demand for oil, including unexpected demand growth in China, India, and other fast developing nations. These nations have experienced a tremendous growth in the number of citizens who have access to automobiles, and their billion-person populations have a strong impact on the amount of crude oil needed in those parts of the world. Seasonal changes can have a serious impact on gas prices as well. Gas prices increase greatly during the summer and holiday seasons because American’s travel increases during these times. For example, the American gas demand increases by 5% in the summer season, resulting in higher gas prices during these times...
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