Effects Of The Rise And Fall Of The Oil Prices - 1123 Words

An article about a current event that discusses a change in the supply or demand of a product. This article covers the effects of the rise and fall of the oil prices in the global markets today. Crude oil is defined as a nonrenewable resource which occurs naturally. It is an unrefined petroleum product composed of hydrocarbon deposits and other organic materials. Crude oil can be refined to produce usable products such as gasoline, diesel and various forms of petrochemicals hence it plays a very crucial role in any economy. The demand for oil has a number of important facts that we can look at starting from 1980 to 2008 where the world’s demand increased by 40%, from 60m barrels per day to over 85m barrels. This was due to the increase in oil consumption of growing economies which make up approximately 66% of total world demand. The other fact is that the demand for oil is relatively inelastic with respect to price, given that oil has few direct substitutes. Similarly, demand for oil is relatively inelastic with respect to income of growing economies. However, income elasticity of demand in developing economies like China and India is likely to be higher. On the other hand, while looking at the supply and demand curve, a market is in equilibrium when the price of a good or service tends to stay the same. Equilibrium is the price at which the quantity demanded by consumers is equal to the quantity that s supplied by suppliers. When either demand or supply changes in any way,Show MoreRelatedIs Oil A Blessing Or A Curse?1521 Words   |  7 PagesIntroduction Is oil a blessing or a curse? This report will be focusing on the above question to determine how both the rise and fall in the prices of oil has affected the aggregate demand and aggregate supply of a nation that relies solely on oil for its revenue. The report would clearly shows the Aggregate Demand (AD) Curve in respect to its effects on the oil-exporting nation, United Kingdom. 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