...How to Deal With High Oil Prices Student Name Institution Global oil industry faces a threat, which primarily originates from escalating oil prices. An increase in oil prices causes a tremendous negative impact on the growth of major developing and developed economies due to its direct effects on the transportation industry thereby affecting mobility of goods and people (Bacon & Kojima, 2006). At the core of the policy response concerning which party should deal with high oil prices numerous parties are considered. These parties are users, businesses, government, and the taxpayers. In response, to escalating oil prices, the government should establish a constant maximum limit of subsidized consumption for each family. Oil subsidy enables government to regulate fuel consumption, which alters the forces of demand and supply thereby obtaining an optimal oil price level. On the other hand, users deal with high oil prices by avoiding the use of personal vehicles unnecessarily. In this sense, users are obliged to use public means of transport, as exceeding the maximum subsidized value leads to a premium rate. In addition, the taxpayers could deal with high oil prices through use of efficient vehicles. Some of the efficient cars have a higher mile to the gallon of gas, which leads to relatively low consumption of gas coupled with less carbon emissions. Improved fuel efficiency offsets the negative impact of higher oil prices on economic growth. Consequently...
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...Oil Refineries in 2013 The O&G sector has seen an increase in volatility over the past five years. Prices were the most extreme from 2008 to 2009 due to the global financial crisis and the recession that followed thereafter. The price of Brent crude dropped from a high of around $150 to a low of $40 during that time period, and the price of natural gas dropped from a high of $13 to under $3. However, by 2010, the price of oil has stabilized and strengthened, and recovery was well underway. The outlook for the O&G downstream sector has been mostly negative since the recession. The rise in crude prices along with the decline in demand to a 15 year low led to weaker margins for oil refineries. Refineries simply could not pass on the higher cost to consumers resulting in the shutdown of a large number of refineries that are losing millions each week. As such, the refining industry is undergoing a regional change with much of the business being diverted to the Midwest. The Sunoco plant in Marcus Hook, PA and the ConocoPhillips plant in Trainer, PA were both shut down due to cost-cutting measures. Together, they account for 20% of the gasoline that is produced in the Northeast. The refinery plants in the Northeast are only able to refine Brent crude which is easier to refine, but the crude is becoming more expensive. The refineries in the Midwest are able to refine the crude that comes down from Canada. This is a heavier type of crude, but is cheaper than...
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...An Anatomy of the Crude Oil Pricing System Bassam Fattouh1 WPM 40 January 2011 1 Bassam Fattouh is the Director of the Oil and Middle East Programme at the Oxford Institute for Energy Studies; Research Fellow at St Antony‟s College, Oxford University; and Professor of Finance and Management at the School of Oriental and African Studies, University of London. I would like to express my gratitude to Argus for supplying me with much of the data that underlie this research. I would also like to thank Platts for providing me with the data for Figure 21 and CME Group for providing me with the data for Figure 13. The paper has benefited greatly from the helpful comments of Robert Mabro and Christopher Allsopp and many commentators who preferred to remain anonymous but whose comments provided a major source of information for this study. The paper also benefited from the comments received in seminars at the Department of Energy and Climate Change, UK, ENI, Milan and Oxford Institute for Energy Studies, Oxford. Finally, I would like to thank those individuals who have given their time for face-to-face and/or phone interviews and have been willing to share their views and expertise. Any remaining errors are my own. 1 The contents of this paper are the authors’ sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its members. Copyright © 2011 Oxford Institute for Energy Studies (Registered Charity, No. 286084) ...
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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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...growth. Clear conclusions have been difficult to achieve because economic theory is ambiguous and the subject has been plagued by research finding spurious associations in the data rather than meaningful causal relationships. Higher inequality can hinder growth by destroying trust in society, hitting investment in skills and reducing demand growth for goods and services from poorer families who tend to spend more of their incomes. But it also provides greater incentives for people to strive to climb the ladder of opportunity and can provide necessary savings to finance investment and growth. Janet Yellen, chairwoman of the Federal Reserve, said this autumn that these conflicts of theory ensured that “society faces difficult questions of how best to fairly and justly promote equal opportunity”. Statistical results showing inequality as bad for growth have also come under surprise fire from professor Paul Krugman, the Nobel Prize-winning economist and...
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...IRAN OIL AND SANCTIONS MGT5A6 Issues in contemporary management Contents Introduction…………………………………………………………………………………………………..3 About Iran oil…………………………………………………………………………………………………3 About Iran Sanctions and problems…………………………………………………………….3-4 Group recommendation………………………………………………………………………………4-5 Bibliography………………………………………………………………………………………………….6 Introduction: This report focuses on Iran national oil company and sanction regarding the atomic energy in Iran and how people in Iran dealing with this problem. About Iran oil: According to OPEC Iran comes second in the world with highest level’s of oil reserves estimated at 150 billion barrels and this is ten percent of total proven reserves in petroleum. Iran is the fourth largest producer of oil in the world and second largest after Saudi Arabia in Middle East but this was all before the sanction. Sanction against Iran and problems: Sanctions against Iran are commonly against nuclear and certain military exports to Iran and this have been affecting all Iranian people around the world. Sanction started five years ago and day by day they make it harder for Iranian people and USA and all the European countries said many times in news that we don’t have anything against Iranian people, we just want to make your government to stop nuclear progress but this didn’t effect Iranian governments but since 2011 the crises start hitting Iranian much more then before, even the price of the product’s and services increased...
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...OUTLINE Introduction A. What effects can produce oil prices increase? a. Brief history and evolution in oil markets b. Causes of the increment in oil prices B. Colombia on the two sides of oil prices rise effects c. Brief description of effects d. Brief history of petroleum industry Body I. International context a. Global situation of oil prices b. Volatility and Dutch disease II. Colombia Case c. analysis of effects in the macroeconomic view: inflation and currency appreciation Conclusion A. Which are the solutions to control the harmful effects of oil prices increase B. What strategies are implementing in Colombia to deal with the effects of oil prices increase. Thesis statement Since the 1970s the world hadn`t experienced an oil increase like the one that is happening these days where many countries are concerned about the effects that this phenomenon can bring to their economies. As an oil exporting country, Colombia has to deal with a lot of challenge in order to transform all the revenues from petroleum into benefits to their society. However there are some effects that can bring some instability to this small economy, especially the one that international markets create a speculative bubble which can end in the Dutch disease. ‘The Dutch disease is a major market failure originating in the existence of cheap and abundant natural or human resources that keep the currency of a country overvalued...
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...feel the prices of gasoline has been fluctuating in recent history. This is a very important topic because it affects a lot of people during the current economic times. The price of gas affects food costs, utility costs, and how much it cost for consumers to get from point A to point B whether it’s by car, airplane, or bus. There are many factors that play a part in gas prices –I will be focusing on are supply and demand due to economic issues and the supply of oil. One factor that affects gasoline prices are economic issues. Our current economic status plays a part because people are more cautious of their money during economic hardships than when the economy is doing well. While people will still by gas some are weary of long vacations that require driving far. Gas tend do go up during the summer months usually due to families traveling with their kids. “The more people are on the roads, the less gasoline is usually available and so the more that gasoline costs consumers. The higher the prices serve in some ways as a checks and balances system to prevent the overuse of gasoline during the summer months.” Some companies (including my job) allow employees to telecommute some days which is a great way to save on gas. When people drive less gas usually go down – which still goes back to supply and demand as a result of the economic status. Lastly, the supply of oil affects the price of gasoline prices. There are times when there is a great supply of oil available...
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...take several months for the US economy to deal with. However consensus shows that this natural disaster won't have a dramatic effect on the US economy growth even though major cities such as Houston has been brutally flooded by Harvey. According to AccuWeather Hurricane Harvey damages is set to about $160 billion dollars, which would set it as the most expensive natural disaster to ever occur in US history. Other estimates seem to cost much less, but rising, according Bloomberg, Harvey is set to cost around $75 billion dollars in economic losses. The damages rose up $33 billion dollars the previous day. Gasoline prices have skyrocketed from the Hurricane. For example, AAA reported that the...
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...……………………………………………………………………………….. | 9 | References …………………………………………………………………………………………….. | 11 | Introduction Overview Cousin Edgar needs to understand/decide if he should invest in buying two gas stations. He must consider the high costs of pursuing this idea on business and to try to recover his costs quickly. If the cost of gasoline is taken as a measuring rod then he needs to understand if he can earn enough to recover the costs of investing. Starting a gas station business can be one of the best decisions Cousin Edgar can make as an entrepreneur. He can either set up new gas stations or buy gas stations for sale. If he decides to buy one then he must have some knowledge about how to buy a gas station and if he is planning to set up new gas stations on his own then he is going to need to do some serious research as to how he can go from start to launch. He needs to consider doing lots of research and checking out numerous gas stations for sale before starting up. One of the first steps is to choose a location and find a property. It is important to find a location with the necessary driver demand for fuel and convenience store items is probably the most vital step. Gas station requires a high start-up costs and operating costs, with a high volume of sales, or it will...
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...Discuss how rising oil prices might affect the macroeconomic performance of an economy. (25 marks) There are four main macroeconomic objectives of the government it wishes to achieve in order to maximise the welfare of the society, they are: low and stable inflation, a favourable current account position on the balance of payments, low unemployment and sustained economic growth. One macroeconomic objective that might be affected by rising oil prices is the current account of the balance of payments. The current account is a record of the trade in goods and services, income flows, and current transfer. The balance of payments is a record of the financial transactions over a period of time between a country and its trading partners. With oil prices rising, import prices will also rise likely causing the levels of demand for oil to decrease. This means that that the price elasticity of demand is very low, so a price change causes a proportionately bigger change in quantity demanded because oil is a necessity due to high usage of oil for transport and there are very little substitutes. As the price increases, quantity demanded will fall but only by a small amount due to it being a necessity. Therefore spending on importing oil will likely rise. This means that imports will likely rise, worsening the current account. There is also inflation, as oil prices are rising. Inflation is the sustained rise in the average price level in an economy. Firms have to pay more to import oil, therefore...
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...with full ownership in geologic and engineering data. MW Petroleum, a free-standing exploration company that was even as large as some of independent oil companies. It operated exploration and development for well, approximately working interests in 9,500 wells in 300 production areas. The growth of MW was very attractive to the other investors, which company grows 30% per year since mid-1980s, due to large acquisition. If the acquisition will push through, this will be one of the largest acquisition in that period because MW size was two times large compare to Apache’s current operation. Amoco Corporation Amoco Corporation was formerly Standard Oil Company (Indiana) was built in 1889 located at Whiting, Indiana, United States. The company was acquired by American Oil Company which founded in Baltimore in 1910 and incorporated in 1922. In 1998, Amoco merged with BP which one of the biggest oil company in England. The company contributes to the modern industry, their innovation was breaks into two parts, the gasoline tanker truck which used to designed to carry liquefied loads, dry bulk cargo or gases on roads and drive through filling is a facility which sells fuel and usually lubricants for motor vehicles. Apache Corporation Last 1954, Apache Corporation was founded in Minneapolis, Minnesota. It’s an American independent oil, gas and energy company. Apache is large multinational company, which regional offices and operations in U.S., Argentina, Canada, Egypt and United...
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...Gas Prices have many different effects in our society the effect it have is mostly negative. Everyday our lives depend on gas, when we are going to school, work or just going out for leisure time. The effect of gas are very affecting in our lives because of many ways gas is used in. There are many different negative effects of rising gas prices families will cut back on vacations or people may take different ways of transportation such as bus or train. People that were born after the 90s the gas prices might not seem like a big deal to them because though out the years is always raised up people became used to it . During the early 60’s gas prices were very very cheap. Gas prices back in those days were only about 30 cents a gallon. Then over the decade it raised only five cents more. Then in the 80s the gas crisis bumped the price of gas up $1.30. The major problem gas prices are so high are because the prices placed on crude oil. This ties into taxes other financial problems causes the gas prices to go up so fast. In reality gas is like a business as it runs as the idea as supply and demand. The price of the oil is up to investors if they feel if gas goes higher they bid to a higher point. If they bid high we pay a higher prices at the pump. During the times of summer and spring it become a rise in gas prices. This is due to people making frequent trips over the summer and the gas prices are going to go up. Gas prices can be affected by a whole...
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...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, as outlined in our book. Be sure to cite any references used. Rapid changes in oil and gas prices can be attributed to supply and demand, market speculation and the expense of refining crude oil into gasoline. Gasoline prices are also directly affected by exchange and interest rates. The world market regulates the price of the oil itself and based on the market retailers and businessmen will increase and/or decrease the price of gasoline. These factors can explain why the price at the pump can vary greatly in such a short time. The formula for determining the prices we pay at the pump is: Crude Oil + Refining Costs + Retail Sales/Distribution + Taxes = Gas Price. The two largest components of oil production are the flow of crude oil and the refining process which represents 69% and 6% of the market respectively. Most of the increases in gasoline prices result from a disruption to one of these areas. An example of this theory would be Hurricane Katrina which wiped out drilling operations and oil refineries on the Gulf coast which resulted in higher gas prices in the U.S. and around the world. Months after Katrina oil production resumed on the Gulf coast and gas prices decreased and supply increased to meet the...
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...not only a weakness for Hershey, but the entire chocolate and candy industries as a whole. In addition to that, Hershey has had price inflation for their products. There has been an increase in consumer consciousness when it comes to the health risks related to foods with high sugar and salt products as well as high-fat and cholesterol foods. Consumers are giving more attention to the product labels of the items they purchase and are choosing to purchase the healthiest products available. When it comes to price inflation, rising costs have been a principally tough challenge for the company. The raw material costs having to do with producing a basic milk chocolate bar weighing 3.5 ounces or 100 grams, has soared 28 percent. Hershey’s has been susceptible to market price increases of key ingredients like cocoa, milk, sugar and peanuts, which all have seen increasing prices. The price of cocoa butter, which makes up about a fourth of each chocolate bar, has risen 63 percent in the last 2 years, reaching a four-year high. Whole milk powder, which is another major part, has risen above 20 percent (Tidy, 2013). In order for the company to fight the rising costs, they would need to both raise domestic wholesale prices and lower product weight. The rising price of cocoa has already been causing pressure for the manufacturer to increase retail prices. Another strategy is to reduce the portion sizes of Hershey bars. In the future, a two-tier chocolate market could develop as brands...
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