...the effects of oil revenues on national economies, the effects of oil prices on oil- consuming economies and the economic alternative to oil production and consumption. Many economies depend on oil as their main source of revenue. It has many effects on these economies, positive and negative. To start with, income from oil reduces poverty in the society and improves its welfare. Oil revenue also contributes highly in the producing countries GDP. Angola, for example is the place where most of Africa’s oil is produced, exports 1.9 million barrels per day. Exporting countries can also use oil in funding schools, hospitals and construction. Low oil prices would normally be considered a downside, but sometimes it forces oil exporting countries to diversify its economy and use oil resources to develop other sectors which is in this case a good thing. On the other hand, low oil prices damage national economies and put a lot of pressure on governments to generate the best solution. Producing countries struggled heavily when oil prices went down and had to lay off large number of employees which gave poverty a rise. Even though the petroleum industry has its upsides, it still has many downsides. World Bank Report remarked “The exploitation of petroleum and mineral resources has been linked to corruption, conflict and poverty”. (Energy and, 2006, p.11). To put it in other word any change any oil prices highly affects both producing and consuming economies. Oil prices are...
Words: 751 - Pages: 4
...and on the masses. Why are these problems visible in a country like Kenya? Because so many other problem are putting multiplier times negative impact on GDP and other macro economic variables such as inflation. Oil and other petroleum products are scarce commodities in the world. Like prices of other commodities the price of crude oil experiences wide price swings in times of shortage or oversupply. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply. Throughout much of the twentieth century, the price of U.S. petroleum was heavily regulated through production or price controls. In the post World War II era, U.S. oil prices at the wellhead averaged $28.52 per barrel adjusted for inflation to 2010 dollars. In the absence of price controls, the U.S. price would have tracked the world price averaging near $30.54. Over the same post war period, the median for the domestic and the adjusted world price of crude oil was $20.53 in 2010 prices. Adjusted for inflation, from 1947 to 2010 oil prices only exceeded $20.53 per barrel 50 percent of the time. (See note in the box on right.) Until March 28, 2000 when OPEC adopted the $22-$28 price band for the OPEC basket of crude, real oil prices...
Words: 11224 - Pages: 45
...Abstract This paper adopts a linear function approach to analyse the effect of fuel subsidy removal on the value of Nigerian Naira and local production in the country. Data for about eight different periods where fuel hike occurred in Nigeria was used, and a mathematical model with the aid of a graph, was also developed to aid estimated calculation of Naira’s value. We also deduced from this study that increase in fuel pump price has an adverse effect on the standard of living of the people, since fuel is essential for the transportation of major Nigerian commodities, such as Agricultural produce and other market product. The significant impact of the upsurge of petroleum pump price on the price of goods transport initiates this study; with the aim of checking its effect on the purchase value of naira. Though this study is totally neutral about the subsidy removal, its just to enlighten us on the topic and let viewers decide. Keywords GDP, Subsidy, Data, Scarcity calls for a quick intervention. In a bid to averting the continual occurrence of this problem, Nigeria government have decided to intervene by deregulating the petroleum sector in the form of subsidy removal. The aim of the government for doing this is to minimize, if not totally eradicate petroleum scarcity. Subsidy removal may however sound nice polite and beneficial, it is essential that there be a critical evaluation of the proposed mechanism for petroleum scarcity alleviation. Lessons from developed countries where this...
Words: 2674 - Pages: 11
...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 in speciality carbon products or as solid fuel. 8. Paraffin wax 9. Aromatic petrochemicals to be used as precursors in other chemical production. Measuring Crude Oil Crude oil is measured in barrels. When crude oil first came into large-scale commercial use in the United States in the 19th century, it was stored in wooden barrels. One barrel equals 42 US gallons, or 159 litres. In...
Words: 3715 - Pages: 15
...Running Head: Supply, Demand and Price Elasticity Supply, Demand and Price Elasticity Team A Adrian Perez University of Phoenix ECO/212 - PRINCIPLES OF ECONOMICS Group ID: BSAH0R4CU8 ONLINE MAIN January 9, 2012 Supply, Demand and Price Elasticity Paper InvestorWords.com (2012) defines a commodity as a “physical substance, such as food, grains, and metals, which is interchangeable with another product of the same type, and which investors buy or sell, usually through futures contracts” (InvestorWords.com, 2012). Differentiating Between Market Structures Table and Paper Resource: Market Structure Table Complete the Market Structure Table located on your student website. Write a 1,050 word paper addressing the following questions: Compare and contrast public goods, private goods, common resources, and natural monopolies. Explain how labor market equilibrium is affected by the supply and demand of labor. Select an organization with which you are familiar and identify the market structure of that organization. Describe the characteristics of the organization that make it a specific market structure. Evaluate the effectiveness of this structure for the organization. For your selected organization, summarize the factors that affect labor supply and demand. Availability of qualified personnel effects both labor supply and demand. For example: A critical shortage of nurses in this country effects the supply of qualified nurses...
Words: 567 - Pages: 3
...PROJECT OF MANAGERIAL ECONOMICS ON PETROLEUM INDUSTRY IN INDIA (OLIGOPOLY MARKET STRUCTURE) (TERM PAPER) SUBMITTED TO:-MOHD. IRFAN COMPILED BY:- ISHAN GUPTA (FS 21) Contents INTRODUCTION 4 Petroleum Industry in India 5 WHY OLIGOPOLY MARKET? 6 JUSTIFICATION 9 WHICH AMONG THE THREE IS 11 DOMINANT? 11 INTRODUCTION PETROLEUM INDUSTRY is considered to be the backbone of an economy because this is the main source of energy till date. Any economy around the world would fail to proceed a single step in the absence of petroleum industry. Thus, before using this energy source, the crude petroleum is required to be refined in the petroleum refineries for extracting various fractions for energy generation namely, Petrol, kerosene, Natural gas, Asphalt and many more. The most important part of petroleum industry is the petroleum refining industry. Petroleum is basically a non-renewable form of fuel which is subject to extinction from the world after a certain point of time. Petroleum industry is huge and a slight effect on it has a major impact on the economy all over the globe. The resource is scarce and DEMAND is very high thus ultimately results in price hike. Price of petroleum is determined by DEMAND-SUPPLY...
Words: 1432 - Pages: 6
...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...
Words: 2669 - Pages: 11
...NAME: Fatmah Ibrahim CLASS: SS 3A SUBJECT: Economics Topic: The Effect of subsidy in Nigeria Economy THE EFFECTS OF SUBSIDY IN NIGERIA ECONOMY. DEFINATION A subsidy is an assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributed as subventions in an industry to prevent the decline of that industry (e.g., as a result of continuous unprofitable operations) or an increase in the prices of its products or simply to encourage it to hire more labor (as in the case of a wage subsidy). Examples are subsidies to encourage the sale of exports; subsidies on some foods to keep down the cost of living, especially in urban areas; and subsidies to encourage the expansion of farm production and achieve self-reliance in food production.[1] EFFECTS OF SUBSIDY REMOVAL In a country of power instability the removal of fuel subsidy has triggered double in the price of fuel . 1. increased price of fuel and other petroleum product 2. increase in transport fares 3. increased price of food products. The Lagos Chamber of Commerce and Industry (LCCI) has listed some of the adverse effects of the Federal Government's recent policy to deregulate the nation's downstream oil sector LCCI, in a statement, said the policy has led to fresh inflationary pressures resulting from sharp increases in transportation cost, high inflationary expectations across all sectors of the economy, and a devastating impact on the psyche of the common people as...
Words: 717 - Pages: 3
...MARKET LIBERALIZATION: THE REDISTRIBUTIVE EFFECT OF PETROLEUM PRICE LIB. THE ROLE OF PETROLEUM PRICE LIVERALIZATION IN THE PROCESS OF FINANCIAL AND ECONOMIC DEVELOPMENT OF NIGERIA PETROLEUM PRICE DEREGULATION IN NIGERIA: AN INTRODUCTION TO THEORETICAL, INSTITUTIONAL AND POLICY ISSUES. Nigeria once flush with oil boom revenues, is now a country of unfinished petrol station construction sites, ghost refinery depots, abandoned petrol stations, an unintended monuments to unrealized expectations. It is therefore not a surprise that in such an environment the appetites for risk should naturally abate often such catastrophic losses and situation. ORIGIN OF FREE MARKET IDEOLOGY IN NIGERIA Overview/introduction A careful study of Nigeria’s economic… reveals that… Economic policies in Nigeria have in the last two decades reflected a drive for accelerated economic development through economic and financial liberalizations. The outcomes have been largely disappointing, even in the honest estimates of their designers. Both urban and rural livelihood has become more insecure, and the expected economic development and growth has rarely materialized. Social and political insecurity are etched into the growth pattern. Ironically, the same liberalization policy that has been so deeply adverse to many sectors of the economy, somehow provided new opportunities to some individuals and groups that have the absorptive capacity to embrace, absorb and integrate both the policy and transfer...
Words: 2969 - Pages: 12
...You can’t go anywhere in this modern world without being affected by the oil industry. We depend on the oil industry to maintain or comfortable way of living. The oil business is all about finding, extracting, transporting, marketing and refining petroleum products. The main petroleum based product is gasoline. We use gasoline everyday in our vehicles. We count on gasoline to get us to our important destinations, because most of these destinations would be time-consuming and exhausting to reach on foot alone. Petroleum is pretty much vital in many of today’s industries. 40% of America’s energy consumption is oil and 30 billion barrels of oil are used every single year. In 2005, the United States of America consumed 21,930,000 barrels of oil in a single day. The production, distribution, refinement and retailing of petroleum make the petroleum industry the largest profit making industry in the world. In America we pay a gasoline tax for the gasoline we buy. This gasoline tax is collected by the Federal Highway Trust fund and is used to pay for road maintenance and other transportation projects or needs here in our country. Therefore, gasoline tax can be described as a “user’s fee”. You drive on the roads, which increases wear and tear on the roads, so you pay the tax on your gasoline in order to maintain the roads. There has been a tax on gasoline since 1919. The initial tax rate was only 1 cent on the gallon, but today, more then 50 years later, we pay around 18-19...
Words: 1908 - Pages: 8
...Process does not stop after absorption of crude oil. There are lots of steps such as extraction the crude oil into category such as petrol and etc. Let’s look at measurement of crude oil. Not like other substances crude oil is measured in barrels. In the 19 century, it was stored in the wooden barrel in developed countries. In present, one barrel equals 42 US gallons, or 159 liters. Also, it is measured in ton scale. We clearly know that number of barrels contained in each ton varies depending on the type and density of each crude (average-7.33 barrels per each ton). Extraction procedure of petrol Petroleum is extracted crude oil which was absorbed from oil wells found in oil field. There some technologies to extract the petroleum but few of them are improved technologies such as fisher-Tropsch process. With higher demand for hydrocarbons miscellaneous method are used in petroleum exploration and development to optimize the recovery of oil and gas known as enhanced oil recovery i.e. EOR. Primary methods are exploited to step up oil that was brought to surface by underground pressure, and can generally recover about 20% of the oil present. The natural pressure is provided by several different sources where it is provided an underlying water layer is called a water drive reservoir and where it is from the gas cap above it is called gas drive. Since...
Words: 3070 - Pages: 13
...The Effects of Falling Oil Prices in Venezuela X W National Introduction Venezuela was founded in1845. It is a member of the Organization of the Petroleum Exporting Countries (OPEC) and located on the northern coast of South America. It is one of the largest crude-oil producers and exporters in the world. “Venezuela’s oil revenues account for about 95 percent of export earnings. The oil and gas sector is around 25 percent of gross domestic product.” (OPEC, 2015) Venezuela is also very famous for its petroleum industry. Except Petroleum, the country’s natural resources include natural gas, iron ore, gold, bauxite, diamonds and other minerals. According to Shehryar (2015), “Since June 2014, a substantial decline in oil prices has occurred, bringing prices of oil down to a five-year low. Venezuela’s oil-dependent economy, without a competitive non-oil sector, has now been facing a tremendous challenge as the per-barrel prices hit a five-year low, with the situation expected to worsen by the first half of 2015.” In this paper, I will introduce the trends of oil and exports in Venezuela and show the effects of the falling price on Venezuela. Trends of Oil and Exports in Venezuela Figure 1 displays the trend of the oil price in Venezuela. Pump price for oil in Venezuela was last measured at 0.02 US dollar per liter in 2012. It was declined from 0.14 US dollar per liter in 1999. The declining trend was huge between 1999 and 2004 and turned down to be smooth after 2008....
Words: 1288 - Pages: 6
...Diversification of Income Resource in Saudi Arabia as Result Decrease Oil Price Names Institutional Affiliation Abstract The main objective of this paper is to study the idea of diversification of the income resource of Saudi Arabia due to the effects of the instability in the oil market. Saudi Arabia as a country has developed due to its oil source which makes it the kingpin in the world oil market. Approximately 85% of the country revenue is earned from the oil economic sector. This is a sign of over reliance on the oil market making the country economy vulnerable because of changes of oil prices. The instability of the oil prices in the global market has signaled the need for economic diversification to build a stable economy (Shoult, 2006). This paper discusses the possible ideas which can be used to up bring diversified economy which does not depend on a single or few sectors of income generation. Introduction Saudi Arabia is a country that is located in the western part of Asia. It is the world largest producer and exporter of petroleum products. The economy of Saudi Arabia has in the past been pivoted on the oil as source of revenue due to the fact that the strength of the economy, foreign investor’s ideas and development of the infrastructures were all dependent on the oil. Fluctuations in the oil prices and demand in the world market has greatly affected the economy of Saudi Arabia and well as a source of livelihood to the majority of the citizens. The country...
Words: 1429 - Pages: 6
...OPEC OIL IN 2010: ECONOMIC EVENTS, TRENDS IN DEMAND AND SUPPLY AND IMPACT ON PRICES Etuwat James J.O., American University of Leadership, 2012 1.0 INTRODUCTION This submission is on an organization known by its acronym OPEC but its full name is Organization of the Petroleum Exporting Countries. The write up seeks to identify economic events related to 2010 that have influenced the trends of the supply and demand of OPEC oil and the impact of these events on oil prices. My focus will be on the period of 2010 and to an extent prior to that year. According to their website (OPEC 2012) , the Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental Organization and was created in the Iraq capital of Baghdad after endorsement of accord in 1960 by the founding members, Kuwait, Iraq, Saudi Arabia, Islamic Republic of Iran and Venezuela. Others came in later in alphabetical order: Algeria (1969), Angola (2007), Ecuador (1973), Gabon (1975), Indonesia (1962), Libya (1962), Nigeria (1971), Qatar (1961), United Arab Emirates (1967). However, Ecuador deferred its membership in the period December 1992 to October 2007, Gabon ceased its attachment in 1995. Indonesia shelved its commitment from January 2009. At the moment, OPEC has Member Nations. OPEC had its head office in Geneva, Switzerland, for five years since its creation but transferred Vienna, Austria in 1965. The governing charter of OPEC differentiates between the Founder Members and Full Members...
Words: 3328 - Pages: 14
...WHAT ARE THE CHALLENGES AND FUTURE PROSPECTS OF INDIA’S PETROLEUM PRODUCTS REFINERIES? Ruqayah Olowonirejuaro* ABSTRACT: The petroleum refining industry is a vital link in the energy chain in many developing and industrialised countries as it plays a key role in providing energy for all sectors of any economy. The structure, economic conditions, and developments in the industry are therefore important matters of national interest. In recent times, significant changes have taken place in India’s refining industry with resultant challenges. This paper seeks to evaluate the challenges faced by India’s petroleum refining industry in view of its recent performance and discuss the industry’s future outlook. Pricing is identified as a most important challenge which if addressed and combined with other complementary remedies could help maximize the industry’s potentials. * The author is currently an MSc candidate in Energy Studies specialising in Oil and Gas Economics at the CEPMLP, University of Dundee, UK. She has a Bachelor of Science (B.Sc Hons) Degree in Accounting from Igbinedion University, Nigeria. She is a student member of the Association of Chartered Certified Accountants (ACCA), and the Energy Institute (EI). Email: oruqayah@yahoo.com TABLE OF CONTENTS ABBREVIATIONS............................................................................................................iii LIST OF FIGURES..................................................................
Words: 4185 - Pages: 17
