Some of these factors include the Factors on the supply-side that affect prices include natural gas production, net imports, and underground storage levels. Increases in supply tend to pull prices down, while decreases in supply tend to push prices up. Increases in prices tend to encourage production, imports and sales from storage inventories. Declining prices tend to have the opposite effects. Factors on the demand side include economic conditions, winter and summer weather, and petroleum prices.
(d) Oil companies anticipate an upsurge in demand for oil in electricity generation. (e) The demand for petrol rises. (f) New technology decreases the costs of oil refining. (a) Shift right. (b) Movement up along (as a result of a rise in price).
He explains that as the global need for oil grows it puts more money in the pockets of the oil producing countries. He has a great “law” in this chapter that says that as oil prices increases the amount of freedom decreases. I found this very interesting just because the measure of freedom can be very subjective and it depends on what a person’s view of freedom is. He also tries to say that the increase of money in these countries fuels more terrorism. Which is another subjective idea because any country becomes richer would almost everything increase?
It has averaged $3.50/mmBtu in recent years due to new fracking technologies and government subsidies (McElroy, Lu, 2013). This price drop has had a serious affect on supply and demand. Subsequently, there has been a major shift in the supply side of natural gas. This shift is primarily due to the massive influx of gas derived from fracking shale gas. Because of this, the United States will be in a position to begin exporting natural gas by 2035 (Friedman,
Elasticity of demand and total revenue are closely related as they both deal with Price and Quantity. If the product being sold has an elastic demand you may increase your revenue by decreasing your price for the product. Price would decrease and your quantity would increase which increases revenue. 2. Is the price elasticity of gasoline more elastic over a shorter or a longer period of time?
Consumer price and producer price in 2009 to 2012 continue to drop and raise the price for consumers was not steady. The direction and magnitude of price change in the Producer Price Index for finished goods anticipates a similar change in the Consumer Price Index for all items. When this assumed relationship is contradicted by the actual movements of the two series. The answer is that conceptual and definitional differences between the PPI and CPI—differences which are consistent with the uses of the two measures—contribute to the differences in their price movements. A primary use of the PPI is to deflate revenue streams in order to measure real growth in output.
When the demand for U.S. dollars increases, the value of the dollar will increase or appreciate (Stone 2008, pp. 685). As a result, U.S. products become more expensive for foriegners causing a reduction in exports and increasing imports. This not only effects the U.S. economy, but also affects the economies in other countries. Monetary policies influence and are influenced by international developments, including exchange rates, and based on these market conditions the U.S. government can make strategic changes to these policies to maintain the country’s economic stability (full employment, stable growth and price stability).
Driving cars, heating buildings, producing electricity, people all need gas. Therefore, gas is directly related to people’s normal life and the global economy. Recently, the Middle East political and economic situation has been deteriorating which has led to the continuous hikes of gas prices. The oil price, the volatile situation in Libya and rumblings in Saudi Arabia are being blamed for spiking gas prices. The political turmoil sweeping across countries like Egypt, Libya, Bahrain, and Tunisia have resulted in rising oil and gasoline prices, increased inflation, devalued currencies, and diminishing stock values.
The Arctic is becoming a high commodity area for shipping and transport since it will greatly reduce trans-ocean routes for a more economical and environmental aspect. The Arctic Council says, “Currently the main driving force for shipping trough the Arctic Sea is transport of oil or gas from Arctic Russia. The discussion on Trans-Arctic shipping evolves, however, also around the issues of global warming, Greenhouse Gas emission restrictions, changes in the geopolitical landscape, possible exploitation of fossil fuel fields in the Arctic and sustainable development in the Arctic” (Shipping Portal). With of the extraction of oil and gas through the Artic it provides the Arctic nations with a rare opportunity to form the future of shipping in the north and hopefully reduce the chances of environmental risks in an area prone to devastation. Talking as a class in the Arctic Council simulation, I truly believe that there needs to be a subgroup of all eight nations working together to ensure ships are obeying the laws of the north and if not are subject to consequences and possible Arctic shipping termination.
Apache lowers its exposure to the risk associated with drilling in exotic or untested location. The majority of Apache’s reserves are within the more stable Northern American market, and reserves that are located in other regions are researched and analyzed before receiving significant attention. Can you quantify how large Apache’s exposure to oil and gas price risk are? Apache has begun a practice of hedging the production of new acquisition. By hedging away future production, Apache is able to lock