Oil Supply Essay

857 Words Oct 27th, 2015 4 Pages
The Supply and Demand of the Oil Industry
Tiffany Turpin
Econ101
American Public University
Medani Adhikari

The Supply and Demand of the Oil Industry
The Worlds oil industries use the consumers to set prices. In mid 2014,the American people began to see a drop in oil prices across the nation. The factors behind the prices dropping is one of speculation. In this paper,the use of supply and demand in the oil industry will show why our oil prices are dropping and that they are projected to continue dropping into the near future. The United States has adversely curbed the use of fossil fuels by using renewable energy. This helps with the amount of oil imported onto American soil. This makes the United States closer to being self
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This leads to supply, there are four factors in the mix now these being demand has fallen due to weak economic activity, Increased efficiency in the nation and oil is being traded for other fuels. The second effect on these prices is the turmoil in Iraq and Lybia. These two nation produce around 2 million barrels of oil a day each, this conflict has not affected their output of oil(E.L .2014, December 8). The third reason, is that the United States is now importing less oil, Due the large spare supply built in the recent years,because of becoming the worlds largest oil producer. Now onto the United States Saudi Allies, Yes the Saudis could sell their oil to other countries and this would hold the price at a higher rate, but why would they want to sell to countries that they hate. It’s easier to sell to a friend(United States) for a lower price. Saudi Arabia has continued to produce oil their cost is about 5 to 6 dollars a barrel. The Saudis hold in their reserves about 900 billion dollars so one would think that they can afford to give their poor friend a break on it’s oil prices.
This however, opens up a whole other set of issues in the United states. The American oil producers can not compete with the rates that the Saudi Government is selling their oil for. This make Saudi Arabia a low cost leader and the United States Oil producers are

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