Example Of Opec Example

Over the past few years oil prices have been dropping. According to the U.S. Energy Information Administration (eig.gov), a barrel of oil cost $86.07 on October 20, 2013. As of October 20, 2015 a barrel of oil

Oil is the product that each and every one of us use. It can be used for fuel, heating and even cooking. The most often known for unstable price is crude oil or gasoline. According to the The Economist, The main reason for price shifts of oil is oversupply. The oil production in Saudi rose 10.3 million barrels per day. This increase is the effect of a new method that I being applied to oil extraction. This method is called fracking, fracking is where they drill into tight-rock formations then gradually turning horizontal for several thousand feet more. This results to accommodations to multiple oil wells. This new approved method of oil harvesting has raised the productivity gains and reduced the cost of harvesting oil.

Several oil-countries have been facing economic and political turbulence as a result of the crash in oil prices, and there is disagreement among OPEC as how to handle the situation. (Krauss) While this is happening, America’s oil production continues to rise, as it inches closer to becoming an energy superpower in production and consumption; and countries that depend on their oil exports face recession.

Middle East is strategically important region where mostly world half of oil reserves are located. Three countries: Saudi Arabia, Iran and United Arab Emirates accounted for 57% of total Middle East liquids fuels production. (Liquid fuels production in Middle Eastern and North African countries n.d.) Although due to increased domestic production of petroleum and natural gas, the United States is reducing its dependence on foreign oil with imported liquid fuels, but still oil means a lot to the US as oil prices is determined internationally by what is available for all global consumers. Therefore, to safeguard the security of Oil supply in the Middle East and ensure stable access to affordable oil is in the vital interest of the America. (Mexican crude oil shipments to Europe and Asia are rising as U.S. imports fall

The United States consumes more than 25% of the world’s petroleum products which is a large percentage, considering only 3% of the world’s oil reserves are produced by the United States. Given the demand for petroleum products such as gasoline, understanding why Crude oil prices have skyrocketed in recent years, is not hard. According to the article “Ending America’s Oil Addiction,” the surge in crude oil prices can be reduced in large part to the simple concepts of supply and demand. (Cooper, 2008)

“Every 10% drop in prices of oil adds 0.1% to the US economy, and the sooner the Iraqis start pumping, the faster the plunge in per-barrel prices. A quick war that ends with a new oil minister in place by the end of the year would bump up Iraq's production to 4 million barrels per day by 2006 from a current 2 million, collapsing prices into the low teens“ (Lynn J Cook 1).

In a revealing article by George Perry (2001) the author discusses the economic impact that a disruption in the oil supplies would have on world oil prices. He states “Currently 28 percent of the world's crude oil comes from the Organization of Arab Petroleum Exporting Countries (OAPEC) consisting of Arab Muslim nations, some of which are not part of the OPEC cartel. The governing regimes in all these countries are at some risk [due to the war on terrorism].” He goes on to state that in a worst case scenario the economic consequences of oil supply disruption would be “oil prices rise to $161 per barrel driving gasoline price to $4.84 per gallon. The increase in the nation's bill for products of crude oil rises by about 10 percent of GDP, which adds perhaps 15 percent to the inflation rate in the first year. And the recession is the steepest and deepest of the postwar period, with GDP declining nearly 5 percent the first year.”

on this years by providing the oil gap cause for the OPEC embargo to those

The U.S. was supposed to be the world’s new swing oil producer, able to nimbly open and close the taps in response to market forces, thanks to its bounty of shale fields.” In the past a barrel of oil has been one hundred dollars, recently it has dropped to thirty dollars. Though some wells can be profitable at low prices it puts a serious strain on the oil industry as explained in this article.

Within the last year, oil prices in the United States have dropped significantly. As oil drilling in the United States has reached its highest level in over 30 years, consumers are reaping the benefits. Among these gains are record-low prices at the pump, and cheaper oil to heat homes. However, oil prices did not just drop on their own; multiple factors contributed to the fall. Increased domestic production, declining global demand, and competition from other oil-producing nations had led to rapidly dropping oil prices across the United States.

Assuming the OPEC has created a more competitive oil market, and it leads to a dramatic decrease in the world average oil price. Deal to the situation as described above, Australia is standing at a position that the rate of inflation decreases significantly. Considering the relevant response towards the change of rate of inflation, the level of real GDP and the unemployment rate in the short term operation and long term operation respectively, this analysis on OPEC would be divided into two main parts: the outcomes without the lower inflation rate causing a change in potential output and the outcomes with such a change in potential output. In addition, the framework of aggregate demand and the aggregate supply would be employed in the explanation

In Alabama the price for regular gas in the gallon is $2.04 up almost 6 cents over last week and 3 cents from last month’s average. The spike comes as the Organization of the Petroleum Exporting Countries agreed to cut back sharply on production in an effort to stem the flow of oil that's kept prices at the pump relatively low during recent years. The move was OPEC's first production cut in eight years. The price of a barrel of crude oil is 25 percent higher than it was a month ago, DeHaan said, and it's set to go up even more as production declines. Over the weekend, some non-OPEC member countries, including Russia, agreed to cut oil production by an additional 600,000 barrels per day.(4)

OPEC was founded in 1960 with 5 counties and the goals to be a dependable oil market for themselves, and to stimulate economic growth in other countries. Leading up to the 1970’s OPEC’s growth and business was relatively unnoticed until an Iranian revolution and Arab oil embargo pushed oil prices to new levels. Changing consumer opinions about oil and over supply led to a market crash in 1986; but from 1990 through to 2000 prices strengthened from increases in technology and a more global market. In 2008 the stock market crisis rippled through all industries and even caused the oil market to suffer. Oil prices then rebounded and at June 2014 oil prices set a record high. OPEC currently has just under 40% of the market share and

·     Opec aims to keep oil prices within the agreed band of US$22-US$28/bbl (www.opec.org). However, with crude oil now ‘…standing at close to $33 a barrel…’ (www.bbc.co.uk) near a 13-year high, Opec considers increasing its target. With a tight US gasoline market, low inventories (The Guardian 27/04/04) and an upsurge in fighting in Iraq (http://news.bbc.co.uk), oil prices look likely to remain high or rise. Ryanair faces persistently high or rising fuel prices. (Source: http://www.guardian.co.uk)

The Organization of Petroleum Exporting Countries (OPEC) , is a permanent intergovernmental Organization, created at the Baghdad Conference on September 14 th, 1960, consisting of the world's major oil-exporting nations. It was founded to coordinate and unify the petroleum policies of its members, to serve as a platform for oil producers to achieve their economic objectives by limiting supplies in the hope of keeping prices and profits high. OPEC's influence on the market is undeniable. Because its member countries hold the vast majority of crude oil reserves (about 80%) and nearly half of natural gas reserves in the world, the organization