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Demand Elasticity of Gasoline
ith gas prices across the country reaching record levels today, understanding the theory of demand elasticity of gasoline has assumed new importance for policymakers and consumers alike. To help understand what motivates consumers to make a purchase decision about a commodity such as gasoline, this paper provides an overview of the economic theory of demand elasticity, empirical data relating to demand elasticity for gasoline, followed by an analysis of the data. A summary of the research is provided in the conclusion.
Economic Theory of Demand Elasticity
Demand elasticity relates to how much consumers are willing to pay for something based on their individual needs and wants on an aggregated basis; economists measure this degree of elasticity along a price elasticity of the demand curve. According to Robert E. Kuenne (1968), "The degree of downward reaction of the amount demanded to a price rise or upward reaction…
Borenstein, Severin. (1991). "Selling Costs and Switching Costs: Explaining Retail Gasoline
Margins." Canadian Journal of Criminology, 22(3):354.
Borenstein, Severin and Andrea Shepard. (1996). "Dynamic Pricing in Retail Gasoline
Markets." Rand Journal of Economics, 27(3):430.
Under an efficiency standard it is very clear that the NCEP suggestions for CAFe standards are grossly over stated and should not be considered the final result for lowering CO2 emissions.
A more detailed analysis of two specific policies, the cap-trade policy, and CAFe standard increase, shows the inefficiency involved in this scenario. In the cap-trade case, higher energy costs reduce the amount of energy used. The cap-trade model limits the amount of energy that can be used per household and provide both price (permit fee) and non-pricing (standards) policies to lead to reduction of energy usage for businesses on a national level. At the current projections, GDP loss as a result of the cap-trade model is projected to be 0.04% lower than the reference figure. While the CAFe standard case, the loss is.26%, more than four times the loss incurred under the first model.
In the case of the…
Committee on Effectiveness and Impact of Corporate Average Fuel Economy (Cafe) Standards, "Effectiveness and Impact of Corporate Average Fuel Economy (Cafe) Standards." National Academy Press. Washington, D.C. http://www.nap.edu/html/cafe/
Kleit, Andrew N. "CAFE changes, by the numbers." Regulation, 10/01/2002. P. 32
National Highway Traffic Safety Administration, "Budget in Brief" http://www.nhtsa.dot.gov/nhtsa/whatis/bb/
National Center for Environmental Economics, "Economic Incentives for Pollution Control 6.1.13. Corporate Average Fuel Economy Standards (CAFE). http://yosemite.epa.gov/
Rising Oil and the U.S. Economy
In May of 2000, Forbes magazine ran an article minimizing the impact that oil prices would have on the U.S. economy. In the article, author Peter Huber writes:
Bill Gates is a very rich man, and that lets Alan Greenspan worry less about oil prices than he used to. Greenspan puts it more broadly, of course: "The economy has lessened its needs and ties to energy." Oil especially. It just doesn't take much of it to make software. (Huber 97)
Just four years later, Huber's article seems less accurate than it might have been viewed at the time it was written and yet, many of the indications presented in the article can be reasonably said to have survived the economic tumult that rising oil prices have caused in the U.S. It is, however, difficult to assess how much of an impact the price of…
Cooper, James C. And Madigan, Kathleen "How Costly Oil Will Test the Economy." Business
Week 8 Nov. 2004: 3907
Englund, Michael "Why Oil Didn't Ignite an Economic Inferno." Business Week Online 16 Nov.
" As far as economic conditions are concerned, as part of the company's strategy it is committed to aiding people with the social and economic problems that they face (Environment and Society). This is known as the community investment strategy. This strategy encompasses human rights, education, and enterprise development (Environment and Society).
BP's management is also concerned with decreasing dependence on oil and has created various initiatives to create new sources of energy.
Shell has also experienced a great deal of profit as a result of oil prices. An article reports that "Excluding a non-operating gain of $113 million, the result was $5.975 billion, ahead of an average forecast of $5.56 billion in a euters poll of seven analysts. "These are good, solid underlying results and better than we have expected," Peter Hutton at van Lanschot Bankiers said. "But it is still not delivering the same amount to investors,…
BP profits rise on high oil. April 25, 2006. Reuters. Retrieved May 23 at http://today.reuters.co.uk/news/newsArticle.aspx?type=businessNews&storyID=2006-04-25T081534Z_01_WLA9431_RTRUKOC_0_UK-ENERGY-BP.xml
Chief Executive's introduction. Official Shell Website. Retrieved May 23 at http://www.shell.com/home/Framework?siteId=envandsoc-en&FC2=/envandsoc-en/html/iwgen/leftnavs/zzz_lhn3_0_0.html&FC3=/envandsoc-en/html/iwgen/introduction_chief_executive/intro_chief_executive_16032006.html
Corporate Citizenship. Retrieved May 23 at http://exxonmobil.com/Corporate/Citizenship/citizenship.asp
Environment and Society. Official BP Website. Retrieved May 23 at http://www.bp.com/subsection.do?categoryId=4534&contentId=7014436
Few states taxes increased during the run-up of early 2008.
Refining costs also account for 19% of the price at the pump. Most refining takes place close the market, although the U.S. is served by some refineries in the Caribbean. The greatest amount of U.S. refining capacity is along the Gulf Coast (EIA, 2009). There is no evidence that an increase in refining costs occurred to justify the price increases recorded. However, there was a capacity shock during Hurricane Ike. The impending hurricane forced refineries to cease operations. The threat of supply shortages caused a rebound in prices, which had been declining over the course of the summer prior (Schoen, 2008).
The final variable, marketing and distribution costs, is often cited as a source of gas price spikes. Gasoline companies are handed significant blame, although more often than not they are merely the messenger that the public is shooting. The…
Website: Energy Information Administration. (2005). A Primer on Gasoline Prices. Retrieved May 9, 2009 from http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/primer_on_gasoline_prices/html/petbro.html
Website: Energy Information Administration. (2009). Refining. Retrieved May 9, 2009 from http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/refining_text.htm
Kahn, Chris. (2009). Gas Prices on the Rise, Crude Ends Week Strong. Associated Press. Retrieved May 9, 2009 from http://www.google.com/hostednews/ap/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD98288UG0
No author. (2007). Annual Energy Review 2007. Energy Information Administration. Retrieved May 9, 2009 from http://www.eia.doe.gov/aer/pdf/aer.pdf
This will require the evaluating organization to determine which competitors are already successfully entrenched in more innovative and 'green' auto designs, which are growing in market share for adopting such innovations and which are shrinking for failing to do so. The power of this knowledge should allow an organization to make constructive decisions about segmenting its own approach to a market which still depends on fossil fuels but which is also showing a will for change
The business imperative is therefore to make a change in practices that prefigures the inevitable tipping point toward the collapse of the petroleum industry. Indeed, "eber tells us that the eventual electrification is necessary for a number of reasons. He says: 'climate change is a fact,' and that: 'peak oil, maximum oil production could come as early as 2020.' it's this, as well as technological advancement and customer acceptance of alternatively powered vehicles…
Energy Information Administration (EIA). (2007). Country Energy Profiles. U.S. Department of Energy (U.S.DoE, 1). Online at http://tonto.eia.doe.gov/country/index.cfm
Fortune, K. (2009). An Insider's View: Merc's Future Green Technology. Yahoo! Cars. Online at http://uk.cars.yahoo.com/04082009/36/insider-s-view-merc-s-future-green-technology-0.html
Gore, a. (2006). An Inconvenient Truth. Paramount Classics.
Online at http://www.climatecrisis.net/thescience/
The Middle East takes great pride in its oil production, and sometimes dictators overstep boundaries in order to claim that oil for themselves, as Saddam Hussein of Iraq attempted to do to Kuwait in 1991.
Kuwait is a particularly extreme example of cheap oil for all within the borders of Kuwait. This small nation just next to the Arabian Peninsula has massive reserves of oil beneath its sands. Oil merchants could potentially make great profits from selling gasoline at market prices in the Middle East and Kuwait, but the overwhelming attitude of oil is that it should be extremely cheap and plentiful always, so oil merchants do not even attempt to exploit the local population with higher gas prices.
hen Iraq attempted to invade Kuwait, a tiny neighbor by comparison, it was seen as vital to American interests to maintain a strong bond with Kuwait, as Saddam Hussein had been…
When Iraq attempted to invade Kuwait, a tiny neighbor by comparison, it was seen as vital to American interests to maintain a strong bond with Kuwait, as Saddam Hussein had been far more volatile of a partner to the U.S. In the past. That is why the entire world condemned Iraq for its actions, and a large unified army action defeated Saddam Hussein's massive tank columns in just a few weeks. Kuwait's pride in its oil was maintained, and they made long lasting and secure relations with the United States for protecting its borders. In the year 2011, Kuwait is resting on solid ground in the region, and is a wealthy and prosperous nation. There is simply no need to charge market prices for gasoline as the sacred oil which has come to define Kuwait has been core to the nations success, and has been so plentiful to the populace for so long that it would be difficult to even change the prices of gasoline for locals.
The Arab Spring and Middle East Unrest. (2011). Brookings Institution. Retrieved October 1, .
Global prices around the world. (2011). CNN. Retrieved October 1, .
In only six of the 16 months studied did petroleum prices move in the same direction as troop casualties, a month after those casualties occurred (See Table 1 and Graph 1). hen we consider the three months with the largest increases (145.2% in April 2006; 60% in December 2006; and 51.2% in August 2006), only once (May 2006) did the following month post increased refined petroleum prices. If we consider all months with at least 20% movement in troop casualties, in only four of the 10 months did refined petroleum prices move in the same direction the following month. Isolating months with at least 30% movement in troop casualties shows that in only one case of five did refined petroleum prices increase the following month. In short, the link gets worse as the percentage increase or decrease in casualties moves significantly.
By analyzing a two-month lag, we are left with…
1. Hall, K. (2006). "What will war cost? Studies weigh oil prices, lost productivity, more." The Seattle Times, Jan. 14. Retrieved Nov. 20, 2007 at http://seattletimes.nwsource.com/html/nationworld/2002739307_warcosts14.html .
2. Kopytoff, V. (2002). "Iraq war could hit at pump." San Francisco Chronicle, Nov. 20. Retrieved Nov. 22, 2007 at http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2002/11/20/BU4619.DTL .
Government sources and statistics
Rising Gas Prices
There are many different reasons why gas prices are rising so rapidly and it often depends on who one asks this particular question of. Many economic analysts share different views about the rise of gas prices and the media has also spent a great deal of time covering this issue. There is something about rising gas prices on the news, in the papers, and on the Internet almost constantly and it is difficult for Americans to avoid the issue or stop being reminded of it when they read or watch television, or when they get on their computers to look at the news of the day. It is also difficult for Americans to forget about this issue every time they drive their cars or pull up to the gas station because every mile they drive reminds them that they are spending more money than they used to…
Burrows, Dan. 2004. Rising gas prices may hurt moderate, discount retailers. Home Furnishing Network.
DeWeese, Adrianne. 2005. Supply, demand control gas prices. University Wire.
Joyner, Tammy. 2005. Fill tank, empty wallet Commuters feel the pinch of rising gas prices. The Atlanta Journal and Constitution
Kirms, Michelle. 2005. U. Rhode Island students talk back about rising gas prices. University Wire.
So far, there are few signs of them reinvesting these profits in infrastructure that would help alleviate the problem, such as more refineries in the U.S. that could create more fuels and help bring prices down. The organizational leadership at this level seems more concerned with continued profits rather than working together with the government and others to help maintain the economy and avoid a recession.
This seems shortsighted, because if a full recession does hit the U.S., consumers will be cutting back even more, and many will have to curtail their driving and travel, especially if they lose their jobs. Thus, this leadership plan is not effective for the long-term. Oil companies may retain record profits now, but in the future, that has to change, and it seems they may not be flexible enough to manage that change when it occurs.
Crutsinger, M. (12 May 2007). Gas prices…
Crutsinger, M. (12 May 2007). Gas prices squeeze consumer. Retrieved from the SuburbanChicagoNews.com Web site: http://www.suburbanchicagonews.com/beaconnews/business/382294,3_3_EL12_ECONOMY_S1.article21 May 2007.
The political situation in the Middle East is extremely volatile. The political situation in the Middle East can have a dramatic impact on oil supplies. However, threats to the oil supply are beginning to emerge outside of the region as well. For instance, there are political situation beginning to arise in Russia, Venezuela, and Nigeria (Federal Reserve, 2004). Political instability can disrupt the supply of oil from a particular region.
eather can also take a toll on the production and distribution of oil and oil products. For instance, hurricane Katrina disrupted oil production in the Gulf of Mexico. This caused a temporary shortage until the services could be restored. There are other external factors that can effect oil prices that are beyond the control of the companies.
Oil futures represent clamed to oil to be delivered at a specified price and at a specified date and location. If the price…
Federal Reserve. (2004). Oil and the Economy. Remarks by Governor Ben S. Bernanke at the Distinguished Lecture Series, Darton College, Albany, Georgia. October 21, 2004. Retrieved July 26, 2007 at http://www.federalreserve.gov/boardDocs/speeches/2004/20041021/default.htm
Harrison, M. (2006). BP pins oil price rise on speculators. April 26, 2006. The London
Independent. Retrieved July 27, 2007 at http://findarticles.com/p/articles/mi_qn4158/is_20060426/ai_n16230189 .
Kaufman, R., Dees, S., Karadeloglou, P., and Sanches, M. (2007).
The former might be, 'What specific...' [while] Less structure might be exemplified by: "Please respond to the following in your own words: I....'" (Dereshiwsky, 1999) in addition:
adding some open-ended items such as these to a more traditionally scaled quantifiable survey, such as one with Likert-scaled attitudinal items, and/or "check/off" questions on demographic background variables, is a good way to make the survey "multimethod" in nature. This is because you'd be using that "single" data collection vehicle (survey instrument) to collect your data (responses) in more than one form: quantitative and qualitative! You could ask the same general questions in both forms and then compare the two alternative forms of responses to see if they 'converged,' or agreed, regarding the phenomenon that you are trying to measure via the survey (e.g., attitudes towards school climate). If they do, you can have greater assurance that "there's something real being captured/measured" regarding…
Area Sales of Luxury SUVs in High Gear; Gas Prices Don't Slow Down Affluent Buyers. (2007, April 28). The Washington Times, p. C10. Retrieved April 24, 2008, from Questia database:
This keeps prices all for all users of oil high at present, given the overall escalation of users in total and insulates the price of gas and oil from subtle increases and decreases upon the part of individual suppliers. (Halcomb, 2005)
However, other possible causes may be simple hysteria and gouging. Historically, even when there has been a wholesale price of gas of $1.45 a gallon, gas stations have been able to make a profit by using the media frenzy to gouge customers, sell it for as much as $2.15.
A third factor may be simple unwillingness upon the part of customers in the United States, in the developing world, and in other nations that depend on crude to limit their use of oil, regardless of gasoline prices. "The people who are honest are going to pay for their gas no matter what the price is," said one gas station…
Halcomb, Ron. (2005) "Gas Prices to Remain High." Retrieved from Auto Blog on 23 Jul 2005 at http://www.autoblog.com/entry/1234000953044926/
Lemaster, Jeff. (6 Apr 2005) " Filling the Tank Takes More from Traveler's Wallets." The Jacksonville Patriot. Retrieved from newspaper website on 23 Jul 2005 at http://www.jacksonvillepatriot.com/Pages/04-06-05/Filling%20the%20tank%20takes%20more%20from.htm
Unleaded gasoline: Yes
pple Computer: Definitely.
Technological has affected quality of these products?
Hershey's Milk Chocolate Bar: Maybe. Upgrades in equipment that contribute to saving time, may potentially adversely affect quality, as with time savings, company may allocate increased responsibilities to employees.
Pepsi: $.99 for a 2 liter bottle: Maybe. Same reasons given for Hershey's Chocolate Bar.
McDonald's hamburger: Maybe. Same reasons given for Hershey's Chocolate Bar and Pepsi.
Unleaded gasoline: Yes.
Improve techniques, including robotics in refining oil contributes to improving the quality of the tickets.
pple Computer: Definitely. Today's computers have greatly improved to two technological advances fracturing them.
Based on what has happened to the purchasing power of people earning the minimum wage?
Hershey Bar: 1.45 oz - 40 cents; 1.65 oz cents/75 cent = 88% increase.
Pepsi: $.89 for a 2 liter bottle (historic food prices) = 11% increase.
McDonald's hamburger: 43 cents (historic food prices)…
Siddiqi, Moin a. "Oil Prices Hit New Highs as Winter Demand Bites." The Middle East Jan. 2000: 29. Questia. 3 Oct. 2007 http://www.questia.com/PM.qst?a=o&d=5001132553 .
Students Buy Texts Online to Save Money; Campus Bookstores' Prices Tripled since 1986." The Washington Times 12 Aug. 2006: A01. Questia. 3 Oct. 2007 http://www.questia.com/PM.qst?a=o&d=5016084048 .
.....gas station owners have no control over the price that they pay for petroleum, and only limited control over what they will end up charging the customer. The base price for crude oil is set on the basis of global supply and demand. Local prices reflect a variety of factor -- the crude price, cost of refining, cost of transportation, oil company markups and taxes (EIA, 2016). The price that consumers pay therefore reflects a variety of factors, almost none of which either the consumer nor the gas station owner has control over. This paper will discuss these factors in further detail, in order to clarify the dynamics of the oil market to better prepare to make a decision on buying four gas stations.
GDP Growth Rate
There are two dynamics at play here. First, the GDP of the area in which the stations are located influences gasoline consumption, by…
Gas Turbine Systems
A gas turbine, also known as a combustion generator, is a kind of inner combustion system. It consists of an upstream revolving compressor coupled to the downstream generator, as well as a combustion chamber amid the two. Power is included in the gas stream inside the combustor, where gas is combined with air as well as then ignited. Inside the high-pressure atmosphere of the combustor, burning of this gas raises the temperature. The various products of this combustion are pushed inside the turbine area. ight there, the higher velocity as well as quantity of the gas movement is redirected via the nozzle across the turbine's rotor blades, moving the generator which drives the compressor as well as, for a few turbines, propels their mechanical outcome. The power given up for the generator originates from the decrease in the heat as well as stress of the exhaust fuel…
Curtis, C.G. (1899). Patent US0635919. Available at: http://www.freepatentsonline.com/0635919.pdf .
Eckardt, D. And Rufli, P. (2002). Advanced Gas Turbine Technology - ABB / BBC Historical Firsts. ASME J. Eng. Gas Turb. Power, p. 124, 542-549
Kamps, T. (2005). Model Jet Engines. Traplet Publications.
Kay, A. (2002). German Jet Engine and Gas Turbine Development 1930-1945, Airlife Publishing.
All these factors have added too many variables to the Middle East, an important region for crude oil production" (Xuequan, 2008).
The improved standards of living have contributed significantly to an increase in the population's demands. And to satisfy these demands, with the ultimate scope of registering higher profits, the American corporations have abused the natural resources and are now moving towards the resources in other countries. Two such vital resources are crude oil and natural gas. The situation of gas is quite stable, but that of oil is critical. Based on limited natural resources, a weakening American dollar, speculative operations on the international market, but also the regulations implemented by OPEC and the conflicts in the Middle East, the price of oil has sky rocked - and it is likely to continue its ascendant trajectory.
Leonard, a., 2008, the Story of Stuff, http://storyofstuff.ethicalbrand.org/last accessed on May…
Leonard, a., 2008, the Story of Stuff, http://storyofstuff.ethicalbrand.org/last accessed on May 30, 2008
Wallace, E., May 13, 2008, the Reason for High Oil Prices, Business Week, http://www.businessweek.com/lifestyle/content/may2008/bw20080513_720178.htm?campaign_id=rss_topStorieslast accessed on May 30, 2008
Xuequan, M., April 18, 2008, Weak Dollar Not Sole Reason for High Oil Prices, Xinhua News Agency, http://news.xinhuanet.com/english/2008-04/18/content_7999121.html . Ast accessed on May 30, 2008
2004, Why are Oil Prices so High?, BBC News, http://news.bbc.co.uk/2/hi/business/3708951.stmlast accessed on May 30, 2008
It could not be expected that these measures would have an immediate impact on gasoline demand. Changes are likely to take some time before the real impact is felt. However, this slowing of demand growth is indicative that the process has begun and that it will continue to grow in the future.
The answer to resolving the issue of gasoline price in the future is the same for both short- and long-term goals. In order to control gasoline prices, supply and demand must be kept in a near-equilibrium state. However, OPEC will never allow this to happen, as this means that they are unable to maximize their profits by using their intricate knowledge of price elasticity and the market. The only reaction that the U.S. government has is to find alternatives to OPEC gasoline and to continue to find ways to decrease U.S. demand. Decreases in U.S. demand…
Horsley, S. (2006). Q & a: What's Behind High Gas Prices? NPR. Business. 27 April 2006. Retrieved 15 February 2009 at http://www.npr.org/templates/story/story.php?storyId=5365439
Surge Is Unlikely for Prices of U.S. Gas," by Clifford Krauss (Krass, 2013). There were four main points of distinction embedded within the article. The first and arguable most important element within the article was in reference to the growing conflict in Syria. The article was written in late August when unrest in the Middle East was near its height. During this period, Americans were concerned with the subsequent rising oil prices that might occur due in part to the civil unrest occurring in Syria. The article first explains how gas prices are unlikely to increase due to a litany of factors. First, Syria is a very small oil exporter. It exports roughly 1% of the world's oil. As such, even if the entire country were to be engaged in war, the resulting damage in regards to oil exports would be minimal. Many pundits believe that the rippling effect of…
1) Kay, Jane Holtz, Asphalt nation: how the automobile took over America, an how we can take it back, New York, Crown, 1997. ISBN 0-517-58702-5
2) Krass, Clifford. "Major Surge Is Unlikely for Prices of U.S. Gas." New York Times. N.p., 30 Aug. 2013. Web. 20 Oct. 2013.
3) Seale, Patrick (1987). The Struggle for Syria. ISBN 978-0-300-03944-3
4) "New Billions In Oil" Popular Mechanics, March 1933. article on invention of water injection and detergents for oil recovery
Higher prices means a decrease in demand, and consumers who are already experiencing difficulty paying for basic goods and are even less apt to buy luxury items. Consumers are more likely to cut things out of their budget, and look for lower-priced items when shopping for necessities. Already, I find myself buying generic goods, looking for food on sale, and putting off replacing clothing and shoes with new items. Some people are even giving up beef, not for ethical reasons, but because it is lower in price than chicken and vegetables substitutes (Krauss 2008, p.1).
Not all industries are suffering because of higher fuel prices. Of course the oil and gas companies themselves are flourishing. Also, while the local middle-level chain restaurants in my town appear to be patronized less than they were, discount department stores seem to be doing well, as consumers can get all of their shopping done…
They less money I spend in general, but particularly on luxuries, the more manufacturers' inventories build up in warehouses, and the fewer new workers are employed. This economic 'spiraling' effect means that I face an increasingly competitive job market and the less likely I am apt to spend money on consumer goods, the more likely I am apt to face the difficulty of finding a high-paying job or any job at all, so I can pay for my student loans. In general, all workers may also have to reconsider the value of taking certain jobs, or a second job to make ends meet, because of the prohibitive costs of a long commute.
Because they too must deal with the concept of scarcity and finite resources, producers must raise prices on goods and services, because it costs more to transport all products across the country and overseas. Higher prices means a decrease in demand, and consumers who are already experiencing difficulty paying for basic goods and are even less apt to buy luxury items. Consumers are more likely to cut things out of their budget, and look for lower-priced items when shopping for necessities. Already, I find myself buying generic goods, looking for food on sale, and putting off replacing clothing and shoes with new items. Some people are even giving up beef, not for ethical reasons, but because it is lower in price than chicken and vegetables substitutes (Krauss 2008, p.1).
Not all industries are suffering because of higher fuel prices. Of course the oil and gas companies themselves are flourishing. Also, while the local middle-level chain restaurants in my town appear to be patronized less than they were, discount department stores seem to be doing well, as consumers can get all of their shopping done in one store, minimizing gas usage, and also look for bargains. I realize that I am lucky to live in an area of the country that is not suffering as much as some other regions. Not all regions of the U.S. are equally affected -- urban dwellers with access to public transportation and for whom car-pooling is more feasible are less cash-strapped than residents of extremely remote, rural areas dependent upon agricultural production. "Across broad swaths of the South, Southwest and the upper Great Plains, the combination of low incomes, high gas prices and heavy dependence on pickup trucks and vans is putting an even tighter
Regulating Oil and Gas Drilling and Transport
The American economy runs on energy produced from oil, coal, natural gas, hydroelectric power, nuclear power and renewable sources like solar and wind energies. In fact according to a report in the Congressional Research Service, oil provides the United States with 40% of its total energy needs. It is used in myriad ways, providing "…fuel for the transportation, industrial, and residential sectors" (Ramseur, 2012). Because of the great need for energy to fuel the American economy, oil in "vast quantities" enters the country and moves through the country by ships and by pipelines, Ramseur explains in the Congressional Research Service. Hence, it is inevitable that some spills will occur, and they certainly do occur, notwithstanding the attempts by the industry to conduct its business safely.
The U.S. Energy Information Administration (EIA) reports that the U.S. consumed 6.87 billion barrels (about 18.83 million barrels…
American Petroleum Institute. (2012). Energy Security. Retrieved February 15, 2013, from http://www.api.org.
Barkham, Patrick. (2010).Oil spills: Legacy of the Torrey Canyon. The Guardian. Retrieved February 14, 2013, from http://www.guardian.co.uk .
Griffin, Catherine. (2013). European Satellite Confirms Arctic Ocean is on Thin Ice, Global
Warming Strikes Again. Science World Report. Retrieved February 15, 2013, from http://www.scienceworldreport.com .
Oil Price Fluctuation
Actions adopted by the government to reduce or limit price fluctuation
Oil Price Fluctuation iii
This report will focus on the actions adopted by the government to reduce the fluctuation in oil prices. A brief introduction is discussed in the assignment. The reasons are also described in the assignment for which the oil prices fluctuate. This assignment also puts light on the price stability and why governments need to intervene to reduce the volatility in oil prices. Strategies adopted by the government to stable the oil prices are also discussed.
easons of price fluctuation
Government intervention to stable the oil prices
Strategic oil reserves
Actions adopted by the government to reduce or limit price fluctuation
The prices of oil were increased in 2007 to 2008. The oil prices were highly fluctuating in 2007 between the months January…
Bacon, R. & Kajima, M. (2008) Coping with Oil Price Volatility. ESMAP p.1-174.
Conerly, B. (2013) Oil Price Forecast for 2013-2014: Falling Prices. Yahoo Inc. p.1-2.
European Central Bank (2007) Price stability: why is it important for you? P.1-87.
Gillman, T. (2008) Why Oil and Gas Prices Fluctuate. Yahoo Inc. p.1-3.
Microeconomic Effects of an Increase in Gas Prices
When considering the ever-changing and highly competitive global landscape of business today, it is striking how many firms continue to rely on fossil fuels (particularly gas) as a primary means of facilitating operations. The functional inputs of countless organizations in countless industries are at the mercy of gas providers. Transportation mechanisms, factory machinery, construction equipment and climate control systems almost always require a petroleum-based source of fuel. And such operational instruments are absolutely vital to the market success of a myriad of small and large businesses. While some businesses have recently begun to realize and actively combat the drawbacks of this type of critical dependence, the actual market share of such firms is truly miniscule. For the majority of companies, an increase in gas or fuel prices has the potential to cause massive profitability and sales damages. What is more, being that…
Berkmen, P., Ouliaris, S., & Samiei, H. (2005, September). The Structure of the Oil Market and Causes of High Prices. Retrieved April 20, 2011, from http://www.imf.org/external/np/pp/eng/2005/092105o.htm
Cabedoa, J.D., & Moya, I. (2003). Estimating Fuel Price 'Value at Risk'. Energy Economics, 25 (3), 239-253.
Chevron Corporation. (2005-08, January 1). What Affects Fuel Pricing - Basics of Supply & Demand. Retrieved February 11, 2011, from The Price of Fuel: http://www.thepriceoffuel.com/whataffectsfuelpricing/
Dahl, C. (2001). Analysing Gasoline Demand Elasticities. Energy Economics, 13 (3), 203-210.
Because the cost associated with fueling the cars will increase, individuals might come up with ways of reducing the consumption of fuel, they will thus use public transportation. When a rise in the prices of gas results into an increase in transportation ridership, the revenues from fare are likely to rise, and the extra costs of fuel for the transport operator will be offset partly. Numerous news reports in the United States are indicating that transportation ridership has gone up with the increase in the prices of the gases; however, little research has been done to prove this association. When there is an effect on ridership, it will be fascinating to notice whether the result is short-lived or a long lived phenom-enon. Therefore, a rapid price increase is capable of resulting into a jump in transport ridership. To become accustomed to the high prices of gas, transporters might buy additional…
American Drycleaner (2006). Rising gas prices may be due to speculation. Rising gas prices may be due to speculation. American Drycleaner, 00028258, Apr2006, Vol. 73, Issue 1
Bradley Jr.,RL (2006) Market Forces Only Cure for Oil Prices. Available online at http://www.cato.org/pub_display.php?pub_id=6418
British Broadcasting Corporation (2008,September). Oil prices rise on hurricane fear.Available
online at http://news.bbc.co.uk/2/hi/7603685.stm
Surging Oil Prices on the U.S. Economy
Although the lingering effects of the Great ecession of 2007-2009 continue to dissipate and economic growth resumes, volatile global oil prices remain a source of concern for economists and consumers alike. While the experts debate the precise date at which peak oil will be reached and the search for alternative energy sources has assumed new importance and relevance, it is clear that the world's commercial infrastructure will depend on fossil fuels well into the foreseeable future. Indeed, some authorities caution that unless drastic steps are taken today, the world will deplete its fossil fuel resources long before commercially viable alternatives become available. In this environment, determining how surging oil prices affect the U.S. economy represents a timely and valuable enterprise. To this end, this paper provides a review of the relevant peer-reviewed and scholarly literature to determine the impact of surging oil prices…
Casey, W.H. & Murray, M.M. (2009). Import and export price trends, 2007: Prices for imports and exports increased in 2007 as global demand for raw materials expanded faster than supply and the U.S. dollar lost value against the currencies of trading partners. Monthly Labor Review, 132(2), 15-17.
Cohan, P. (2011, February 23). What do rising oil prices mean for U.S. economic growth? Daily
Finance. Retrieved from http://srph.it/fQZOLe . Retrieved from http://188.8.131.52/oiaf / economy/energy_price.html.
Earley, R. & Smith, K. (2011). Energy price impacts on the U.S. economy. U.S. Department of Energy: National Energy Information Center.
S. provided important intelligence from a spy plane (SR-71 Blackbird). Thanks to the spy plane pinpointing where the enemy forces were gathering, Israel could pound those forces from the air and in time -- thanks also to U.S. military equipment being shipped to Israel -- the war was won by Israel.
But the OPEC nations knew how much the U.S. depended on Arab oil supplies; as Rudiger Graf writes in the peer-reviewed journal Diplomatic History, the use of an embargo to punish America and the Netherlands was "…watershed in history, signifying the growing dependency of industrialized nations on foreign oil and a power shift in the global economy" (Graf, 2012, 185). The "oil weapon" had never been used by Muslim nations against the est, and the point was to for America and other "…economically powerful countries to comply with their political demands" (Graf, 185).
Meanwhile the embargo caused gasoline prices…
Graf, Rudiger. "Making Use of the 'Oil Weapon': Western Industrialized Countries and Arab
Petropolitics in 1973-1974." Diplomatic History, 36.1 (2012): 185-208.
History Learning Site. "The Yom Kippur War of 1973." Retrieved April 26, 2013, from http://www.historylearningsite.co.uk . 2013.
Souder, Elizabeth. "Fueling the Frustration: Get used to higher gas prices, experts say, but don't expect long-term shortages." Dallas Morning News. 2005.
Shale Gas Analysis
What is shale gas?
According to Alexander et al., (2011), shale gas refers to a natural gas that stored in organic-rich, fine-grained rocks, including shale, laminated siltstone, or mudstone. It contains a mixture of hydrocarbon gases, majorly ethane, and methane. The gases are tightly locked within the pore spaces of the sedimentary rocks. The reservoirs of the shale gas have features such as low impermeability to clay content and, small grain sized contents. The term shale does not focus on a specific rock, but rather the rocks that have fine-grained particles that are smaller than the coarse-grained particles such as siltstone and carbonate rocks among other rocks. The generation of the shale occurs through various processes that include primary and secondary thermogenic degradation alongside biogenic degradation of the organic matter. The occurrence may also occur in a combination of all of the above mechanisms. The formation of…
Alexander, T. et al., 2011. Shale Gas Revolution. Oilfield Review, 23, pp.40 -- 55. Available at: http://www.slb.com/~/media/Files/resources/oilfield_review/ors11/aut11/04_shale_gas_revolution.pdf .
Andrews, I.J., 2013. The Carboniferous Bowland Shale gas study: geology and resource estimation. Report, p.64pp.
Bakshi, V. 2012. Shale gas: a practitioner's guide to shale gas & other unconventional resources. London, United Kingdom: Globe Law and Business.
Berman, A., 2009. What's new in exploration? Shale plays and lower natural gas prices: A time for critical thinking. World Oil, 230, pp. 15 -- 16. Available at: http://www.worldoil.com/Magazine/MAGAZINE_DETAIL.asp?ART_ID=3762&MONTH_YEAR=Jan-2009 .
3.2. The chart
At this level of the research endeavor, emphasis would be placed on the secondary sources of information. These reveal the benefit of presenting the reader and the researcher with vast information on the historic evolution of the gas prices. The most reputable source in this sense is represented by the Energy Information Administration, which has recently issued a report on the energy outlook. According to the researchers and editors at EIA, the five-year evolution of the gasoline prices in the United States is represented as follows:
Massive price increases in 2007 and the first half of 2008
Dramatic price decrease in the second half of 2008
Slow, but steady increase starting with 2009 and continuing through 2012
The growth in prices commenced in 2009 and expected to continue through 2012 would not lead to the same high gasoline prices as registered in the first half of 2008.…
2011, Short-term energy outlook, Energy Information Administration, http://www.eia.doe.gov/steo / last accessed on February 28, 2011
The p-value, University of the West of England, http://hsc.uwe.ac.uk/dataanalysis/quantIssuesP.asp last accessed on February 28, 2011
hy do gasoline prices fluctuate so wildly and frequently? One month the price of gasoline is around $3.50 and the next month prices have jumped to $4.00. hy does this happen? There are several reasons that are given by authorities and other sources and they will be presented in this paper.
Reasons hy Gasoline Prices Fluctuate
According to the U.S. Energy Information Administration (IEA), the price of crude oil on the world market is a "major reason" for the changes in gasoline prices and ultimately crude oil prices are the reason for the extremely high prices of gasoline in the U.S. The price of crude oil is "greatly affected by levels of supple relative to actual and expected demand…" for the various petroleum products that are made from crude oil including gasoline.
In 2012, for example, oil prices went up and down on a wild roller coaster ride…
Amadeo, Kimberly. (2013). Why Are Gas Prices So High? About.com. Retrieved May 18, 2013,
from http://useconomy.about.com .
Forbes, Randy J. (2013). FAQs: Gas Prices. U.S. House of Representatives. Retrieved May 18,
2013, from: http://www.house.gov .
Houston's large supply of land means that demand growth primarily results in more construction, not higher prices" (McCullagh & Gilmer, 2008).
However, it is important to realize that land supply is only one part of the reason that new home construction formed such a large part of the Houston housing market. Yes, Houston has more available surrounding land than almost any other major metropolitan area in the United States, but it also applies different rules to its surrounding areas, making development more of a possibility than in other areas:
In Houston, developers can create a munici-pal utility district, or MUD, to provide these [water, sewage, and drainage] services on their properties and can finance these with tax-free bonds. Houston requires developers to build MUDs in such a way that they eventually could be connected to the city's corresponding infra-structure, but they begin as self-sufficient enterprises.
In other cities, develop-ments must…
Amromin, G., Huang, J., Sialm, C., & Zhong, E. (2010, Oct. 31). Mortgage complexity and house price dynamics. Retrieved March 18, 2011 from University of Maryland Robert H. Smith School of Business Website: http://www.rhsmith.umd.edu/feaconference/docs/Session1SialmMortgage.pdf
Aydin, R. & Smith, B.A. (2008), Evidence of the dual nature of property value recovery following environmental remediation. Real Estate Economics, 36: 777 -- 812. doi: 10.1111/j.1540-6229.2008.00230.x
Bajari, P., Chu, C.S., & Park, M. (2010). An empirical model of subprime mortgage default from 2000 to 2007. Retrieved March 19, 2011 from the National Bureau of Economic
Research Website: http://www.nber.org/papers/w14625.pdf
structure o the global oil industry b. The structure of the global gas industry.
The integrated oil and gas companies (IOCs) are vertical, tall, or centralized structures where producers refined 100% of their production and then marketed refined products through their retail outlets. Production and distribution was downward. Today many of these IOCs combine verticality with a certain horizontalness with many spreading their tasks over various fields and involved in various simultaneous activities. They operate in many segments, whilst also buying and selling oil and gas to and from other firms. The companies are therefore centralized around a certain core management with specialists in each field clustered in tiers underneath.
The vertical structure denotes uses a hierarchical structure with downward directives and management span of control where underneath tiers are controlled by and responsible to upper levels of management. Again, each of the firms demonstrate this vertical structure in diverse…
Charon Advantages & Disadvantages of the Vertical Functional Organizational Structure
Inkpen, A The Global Oil and Gas Industry -- 2010. Thunderbird.
While domestic demand has decreased in recent months in response to the price increases, demand in international markets, particularly in China and India, has continued to grow. The nature of demand in those markets means that demand there continues to be inelastic. With expanding economies that are increasing the wealth of the populace en mass, those countries are essentially creating millions of middle class consumers with middle class needs where they didn't exist before. There is no elasticity to the creation of new consumers, as few would reject the opportunity to join the middle class simply because gas prices are on the rise. Twenty years ago, global demand reflected almost entirely demand in the West, which was inelastic. Now that demand in the West is becoming elastic, some clearly feel that this should be the case for global demand as well. But demand in emerging markets is still inelastic, which…
Boyon, Nick. (2008). As Gas Prices Near $4.00 a Gallon Nationally, Two-Thirds of American Say they have Changed their Driving Habits. Ipsos. Retrieved June 18, 2008 at http://www.ipsos-na.com/news/pressrelease.cfm?id=3953
Carey, Nick. (2008). FedEx Posts Loss; Gives Low Forecast; Blames Fuel. Reuters. Retrieved June 18, 2008 at http://www.reuters.com/article/ousiv/idUSWNAS861120080618
Kaiser, Emily. (2008). Fuel Spike Curbs Vacations, Dining Out. Reuters. Retrieved June 18, 2008 at http://www.reuters.com/article/ousiv/idUSN1744550120080618
Douglass, Elizabeth & Gaouette, Nicole & Simon, Richard. (2008). Are Commodities Traders Bidding Up Food, Fuel Prices? LA Times. Retrieved June 18, 2008 at http://www.latimes.com/business/la-fi-traders21-2008may21,0,2916861.story
Emissions have dropped at a faster rate in the United States vs. Europe within the past several years precisely because of the shift from coal to natural gas, which has led to an initially dramatic decrease. The rate of decrease will shrink as coal power plants are shut down. However, the goals set by the Obama administration have already been reached, long before the 2020 goal. China remains the key player in reducing greenhouse gas emissions, as the United States has made measurable progress. This is in large part due to the dismantling or retrofitting of old coal-fired power plants, as they make the transition to renewable, gas, and mixed-use facilities. The shifts are becoming financially feasible, especially over the long haul. Short-term gains are remarkable, and long-term gains are set to be even more lucrative for the vertically integrated industries. The shift from coal to natural gas does not…
Fuel and Economy
The price of fuel affects every citizen in one way or another, thus, it can have profound consequences on not only the United States, but the global economy as a whole.
On April 28, 2005, President George . Bush expressed concern about the economy due to higher energy prices, and stressed the need to take measure to boost oil output and lower prices (Bush pp). In a primetime press conference, Bush said the small business owners and families are paying higher prices at the gas pump, and that higher gas prices is like a tax and "I do think it's affected the economy" (Bush pp). His comments followed a report that same day from the Commerce Department that stated that the United States "economy grew at an annualized 3.1% in the first quarter in terms of real gross domestic product, decelerating from the previous quarter's 3.8% and…
Gray, John. "Books: Goodbye globalisation? The World Is Flat."
The Independent (London, England); 4/29/2005; pp.
Marshall, Randi F. "War's ripple effects set city businesses back."
January 27, 2005
As the situation exists today, driving gasoline and electric hybrid vehicles is still more economical and environmentally sensitive than driving fuel cell cars run on hydrogen. The future may prove otherwise but the reality is that hydrogen has not proven to be the great answer that some have suggested.
IV. Comparing popular press and professional viewpoints
As one might expected, the treatment provided the issue of hydrogen use has received different treatment in the popular press than it has in the professional journals. In the popular press, the emphasis has been on the how the use of hydrogen as an alternative fuel would benefit the whole of society. Little attention is provided the technical problems related to the use of hydrogen or the requisite changes that must be made in order to accommodate the changeover to hydrogen. Instead, the popular press tends to point out the environmental and consumer advantages.…
(Editor), Shawna McQueen. Analysis of the Transition to Hydrogen Fuel Cell Vehicles & the Potential Hydrogen Energy Infrastructure Requirements. Survey. Washington, D.C.: U.S. Department of Energy, 2008.
Gold, R. "Natural Gas Costs Hurt U.S. Firms." Wall Street Journal 17 February 2004: 2.
Kinaci, A. "Ab initio investigation of FeTi - H System." International Journal of Hydrogen Energy (2006): 2466-2474.
Liss, William E. Role of Natural Gas in the Future Hydrogen Market. Research. Des Plaines, IL: Hydrogen Energy Systems Center, 2003.
Gas-Burning and Wood-Burning Fireplaces
Now that colder weather is bearing down, many people are turning to their fireplaces for warmth and comfort, as they have done for centuries. But while building a fire was once a necessary skill to achieve the glowing warmth of a blaze in the fireplace, modern technology has now made creating a roaring fire as easy as flipping a switch. Homeowners now have the choice between gas-burning and wood-burning fireplaces in their homes, but what are the differences between the two and is there a clear advantage of one over the other?
The essential difference between the two is obvious: the material used to build the fire. Wood-burning fireplaces rely on cured fire logs and kindling, whereas gas fireplaces are filled with fake logs and rely on a connection to a gas line for burning fuel.
Because of the difference between the burning materials, the construction…
"Burning Wood Is More Expensive Than Gas?! " Hearth.com. Retrieved from http://www.hearth.com/econtent/index.php/forums/viewthread/62420/
Guttman, George. "Wood vs. Gas Fireplaces." Sound Home Resource Center. Retrieved from http://www.soundhome.com/article/wood-vs.-gas-fireplaces-and-stoves
High Oil Prices and Effect on the Economy
Global oil prices have maintained a creeping trend since 2004, following the 2001 initial oil crisis (Pahl & ichter, 2009). The increase in oil prices and the expected further increase in the future pose a serious threat to the stability of the global economy. This study looks at how high oil prices affect the economies of both developed and third nations, which makes them remain vulnerable following an unstable period of fluctuating oil prices. It draws and contributes to the existing literature carried out by researchers globally. This study is based on the most recent dynamics of high oil prices and the effect on the global economy. Oil is a significant factor of production in many countries; the fluctuation of its price to a high level has a significant negative effect in the growth of global economy.
High oil prices and effect…
Pahl, N., & Richter, A. (2009). Oil Price Developments - Drivers, Economic Consequences and Policy Responses. Mu-nchen: GRIN Verlag GmbH.
Ye-pez-Garcia, R.A., & Dana, J. (2012). Mitigating vulnerability to high and volatile oil prices: Power sector experience in Latin America and the Caribbean. Washington, D.C: World Bank.
United Nations (2008). World economic situation and prospects 2008. New York: United Nations.
Producing inexpensive restaurant meals for McDonald's has been highly profitable, given its ability to sell many burgers quickly and to create standardized franchises all over the world. Having the ability to produce in large volume also buffers a firm against the danger of a price-elastic good getting into a price war with other firms. In the case of Mattel and McDonald's, both firms are so large and have such brand recognition, they are protected to some extent of being forced to sell at such a low price they cannot cover their overhead.
Occasionally, pricing low does not achieve the desired objective: during boom times in some instances, the cheapest goods and services will sometimes experience a drop in demand, while higher-end purveyors will see the goods and services they sell become more in-demand. But selling price-elastic goods always requires clever and deliberate strategizing upon the part of the producer, unlike…
Price-elastic goods. (2009). Investopedia. Retrieved November 3, 2009 at http://www.investopedia.com/university/economics/economics4.asp
It was from this lesson that legislators began to understand the need to put away large percentages of their oil profits and to not depend so much on spending that cash flow.
After the recession of the 1980s, Norway drastically re-examined its oil policy from both a fiscal and regulatory perspective. Up into the late 1980s, "foreign oil policy followed what was called a 'purely commercial line.' That is, it was not desirable to declare officially that political evaluation were included in its design," (Austvik 1989, p.1). This lead Norway to be established as a "free rider" within the global oil market. According to research, "As a 'free rider' in the market, Norway was then also in the best possible position; she could increase her production and at the same time reap the price benefits deriving from other counties' production reductions," (Austvik 1989, p.1). The recession of the 1980s lead…
Austvik, Ole Gunnar. 1989, "Norwegian oil and foreign policy." Norwegian Foreign Policy Studies. No. 68. Retrieved July 28, 2009 at http://www.kaldor.no/energy/norwoil1989intro.htm .
Davis, Jerome D. 2006, the Changing World of Oil: An Analysis of Corporate change and Adoption. Ashgate Publishing.
Engebretsen, Marit. 2007, "The Norwegian energy sector and Europe." Norway: Official Site. Retrieved July 27, 2009 at http://www.eu-norway.org/policyareas/energy/.
Erikson, Tore. 2006, "The Norwegian petroleum sector and the Government Pension Fund -- global." Ministry of Finance. Retrieved July 27, 2009 at http://www.regjeringen.no/upload/FIN/Statens%20pensjonsfond/The_Norwegian_Petroleum_Sector_te.pdf .
This invariably means reducing the profit margin for the producers, which economists feel has long-term implications. That is the lack of smooth inflationary shock transmission leads not only to reduction in production output but also contributes to reduction in future investments. Thus, inflationary shocks due to oil price hikes are more long lasting in China. [Tang et.al, 2009]
The impact of Oil price explosion is nowhere as pronounced as in sub-Saharan Africa and in particular the oil importing countries. Among the lower economies those that are oil intense such as the sub-Saharan countries are bound to suffer more -- as much as 3% of their GDP. Oil dependence has not change much with only 6% reduction between 1990 and 2005. This is because these countries have a total dependency on oil as their major source of energy compared with other developing countries in Asia. For instance, India and…
1) Jad Mouawad, 2009, 'Rising Fear of a Future Oil Shock', retrieved Nov 18th 2009, from, http://www.nytimes.com/2009/03/27/business/energy-environment/27oil.html
2) Tom Doggett, (2009), 'U.S. Sees OPEC 2010 Oil Export Earnings at $750 Billion', retrieved Nov 18th 2009, from, http://www.reuters.com/article/reutersComService_3_MOLT/idUSTRE5AA4HD20091111
3) Christopher Johnson, (2009), 'OPEC Oil, Gas income tops 1 Trillion, Reserves Up', retrieved Nov 18th 2009, from, http://www.reuters.com/article/GCA-Oil/idUSTRE5673L920090708
4) OECD, 'Unemployment in OECD Countries to approach 10% in 2010, says OECD', retrieved Nov 19th 2009, from, http://www.oecd.org/document/57/0,3343,en_2649_33927_43136377_1_1_1_1,00.html
For each item identified, explain why the data item is important, and describe the level of detail that would be necessary for the data to be useful.
The major data items that Citizen's Gas should be incorporating into their system include: the number of customers they are working with, the customer rate structure and the heating factors. As far as the number of customers is concerned, this is when the company is estimating future usage among based on current demand. The reason why this data is important, is because it helps executives to determine, how much natural gas they will need to meet customer demand throughout the year. ("20.1 Adapted from CMA Exam," n.d.)
The customer rate structure is when monthly data is collected and sent to managers about changes in revenues. This helps everyone to determine if there are sudden shifts in usage. As a result, the level of…
20.1 Adapted from CMA Exam. (n.d.).
Citizen's Gas. (n.d.).
Hybrid vs. Gas Powered Cars
Currently, global warming and a shrinking natural resource base are two of the greatest headaches for governments and regulators alike the world over. The price of gas in the U.S., for instance, almost doubled over the last decade, from $1.86 in 2004 to $3.62 on average in the first half of 2014; and given that more than half of the country's oil consumption is taken up by motor vehicles, one question looms -- what will the situation on our roads be like when our oil reserves can no longer sustain our consumption needs? Then there is the even greater problem of greenhouse emissions and global warming. The transport sector accounts for approximately 17%-18% of total CO2 emission globally, and automakers have been under intense pressure to roll out emission-free automobiles, and thereby reduce the damage resulting from the Greenhouse effect. More and more regulators are…
IIHS. (2014). Hybrid Models have Lower Injury Odds than their Conventional Counterparts. Insurance Institute for Highway Safety (IIHS). Retrieved 5 November 2014 from http://www.iihs.org/iihs/news/desktopnews/hybrid-models-have-lower-injury-odds-than-their-conventional-counterparts
Markel, T. & Simpson, A. (2006). Cost-Benefit Analysis of Plug-In Hybrid Electric Vehicle Technology. WEVA Journal, 1(1), 1-8.
Pavan, R.S. (2013). A Review on Hybrid Vehicles. International Journal of Research and Engineering and Technology, 2(5), 59-64.
Reddy, S.S. & Tharun, K.S. (2013). Eco-Friendly Vehicle: Hybrid Electric Vehicle. International Journal of Engineering Trends and Technology, 4(4), 957-960.
The problem which the oil and gas industry is currently experiencing is similar to the issues confronting most industries today—volatility. The year 2018 has been one of the most economically volatile years on record. At present, oil prices are rising, although they are considerably lower than their record highs of 2011. Oil and gas companies must find ways to continue to exploit current price trends while hedging their risks.
The great strength of the industry is that much of the world remains dependent upon oil. Recent oil prices are expected to remain in place in the short term but over the next ten years they are predicted to rise (Biscardini, et al., 2017). The world continues to industrialize at a rapid pace, likewise driving the level of demand.
However, most oil companies remain historically very expensive to operate, both in terms of supply chain delivery as well…
The implications of this vulnerability to volatile oil prices is simple; 'high crude prices must encourage European governments to make investments in energy sources other than oil' (Wielaard, 2005, p.1).
The negative economic impact of rising oil prices is typically more severe for developing countries than for OECD (Birol, 2004, p.2). This is currently the case as high oil prices 'are badly affecting many developing countries' (Schlein, 2005, p. 1). The U.N. Conference on Trade and Development (UNCTAD) recently stated that 'the high cost of oil is placing a heavy burden on poorer nations that spend around five-percent of their gross domestic product on oil. This, compared with the two-to-four percent that wealthier nations pay' (Schlein, 2005, p.1).
There are several reasons why oil-importing developing countries struggle more over high oil prices than their developed counterparts. Energy dependency and intensity is greater in developing nations than developed ones; this is…
Birol, Fatih (2004). Analysis of the Impact of High Oil Prices on the Global Economy. Retrieved September 8, 2005. Web site: http://www.iea.org/textbase/work/2004/cambodia/bj_session1.3.pdf .
Economist, The (2005). Counting the Cost; Oil and the Global Economy. The Economist, 376
Ellson, Andrew (2005, Sept. 6). Oil Price 'A Shock to Global Economy'. Times Online.
Oil prices across the globe are characterized by major swings and fluctuations, which have attracted considerable attention from scholars, policymakers, and practitioners. The increased attention in oil prices are attributable to the fact that they have significant impacts on the global economy. Based on academic literature, oil prices fluctuate for various reasons including supply disruptions, changes in global demand, and precautionary intentions. For instance, in the aftermath of the 2008 global economic recession, oil prices fell because of an overall decline in global demand (Lee & Huh, 2017). Fluctuations in oil prices have been evident since 2012 to the end of 2016 because of various factors that contribute to changes in these prices. Despite these various factors, there are several measures that are utilized to predict oil prices in the future. This paper discusses the reasons for changing oil prices, oil price fluctuations between 2012 and 2016, and prediction of…
Amadeo, K 2017, Oil Prices Forecast 2017-2040, The Balance, viewed 6 April 2017,
Arab News 2017, Oil Prices to Average $50 and $70 through 2022: Report, Arab News, viewed 6 April 2017,
Asia Pacific Energy Research Centre 2016, The Effect of the Crude Oil Price Drop on the Global Energy Market, Asia Pacific Energy Research Centre, viewed 6 April 2017,
Baumeister, C & Kilian, L 2015, Forty Years of Oil Price Fluctuations: Why the Price of Oil May Still Surprise Us, University of Michigan, viewed 6 April 2017,
A large body of literature has treated many different aspects of these influences on Asia, Europe and the United States (Busser & Sadoi, 2003). The importance of the study relates to the current trends taking place in Libya where aggressive steps have been taken in recent years to normalize relations with the international community. For example, Libya opened up its programs to develop weapons of mass destruction to international scrutiny and renounced terrorism as a political tool (Libya, 2010). Moreover, the country's political leadership has been equally forthcoming in its efforts to normalize their relations with Western nations since 2003 (Libya, 2010). More recently, Libya has been removed from the U.S. State Department's list of states that sponsor terrorism in 2006 and in 2008, Libya joined the United Nations as a nonpermanent member on the UN Security Council during the 2008-2009 term (Libya, 2010).
Other signs that clearly point to…
About us. (2010). Mobil. Retrieved from http://www.exxonmobil.com/Corporate/about.aspx .
Al-Waha Oil Company overview. (2010). Al-Waha Oil Company. Retrieved from http://www.
Announcement of oil discovery. (2010, July). National Oil Corporation. Retrieved from http://en.noclibya.com.ly/index.php?option=com_content&task=view&id=1423& ;
Exxon Mobile and Game Theory Analysis
ExxonMobil is the world's largest publicly traded international oil and gas company that operates in an industry that is dominated by several large firms (Exxonmobil, N.d.). On the international level, there are barriers to entry that make it difficult for new entrants to emerge, the product is considered a commodity, and as a result many have argued that this industry most likely follows the oligopoly market structure. The oil and gas industry as a whole is made up of three main types of activities in either upstream, midstream, or downstream industry segments which include such functions as exploration, extraction, transporting unprocessed raw materials, processing the materials in refineries, and further downstream conversions which will eventually lead to the finish products.
The oil and gas industries is arguably the most important industries in the world given the fact that it fuels much of the energy…
Castillo, L., & Dorao, C. (2013). Decision-making in the oil and gas projects based on game theory: Conceptual. Energy Conversion and Management, 48-55.
ExxonMobil. (N.d.). About Us. Retrieved from Exxon Mobil: http://corporate.exxonmobil.com/en/company/about-us
Roy, A. (2003). Game Theory in Strategic Analysis. Journal of Management Research, 127-138.
("Fossil Fuels and Minerals," n.d., 173 -- 215)
The impact of wind farms on the natural landscape is troubling. This is because some communities think that the sight of large fields is destroying the scenery. Evidence of this can be seen in Martha's Vineyard. What happened is many residents began to oppose these kinds of projects out of concerns about how this will impact their views. This led to animosity about where to place wind farms. As a result, proponents argue that establishing these fields in different locations will be challenging. This is when the project will face increased delays and higher costs. ("Fossil Fuels and Minerals," n.d., 173 -- 215)
Advantages of Wind Power
Despite the claims of opponents, the reality is that the use of wind power is a viable resource. A good example of this can be seen with Denmark (who produces 20% of their total energy…
Fossil Fuels and Minnerals. (n.d.).
Renewable and Nuclear Energy. (n.d.).
Deal, W. (2010). Wind power: An emerging energy source. Technology & Engineering Teacher, 70 (1), 9-15.
I-Button Experimental Design Project
Many people often take our environmental temperatures in our homes for granted. A majority of us have automated heating and cooling systems, electric or gas systems for example, that regulate temperature within a range of a roughly a couple of degrees. However, some individuals, either through choice or through necessity, must rely on alternate heating systems such as a wood burning fireplace. The proposed experiment will compare the temperature ranges that are observed by an iButton temperature logger in different heating system designs.
Statement of Need
Heating and cooling costs can be one of the greatest expenses relative to maintaining a house. Furthermore, in the future, these costs could grow substantially as energy prices rise due to the fact that many sources of energy are non-renewable or for the fact that policies may be introduced to greenhouse gas emissions that are driving climate change. Whatever the…
I have two observations- one small but interesting and one for which I would like a response.
The first- you have transposed the authors names as Ingram and Schneider- in deed this is small but important - you will want to cite them as Schneider and Ingram going forward- as I said - small but important
Next I think you can develop your response to item 3 regarding your research interest.(my research interest is African-American women in the gas and oil field and how minority set aside programs fail them)
You have made a few claims that public policy is weak and that public policy fails- What is the weakness you have identified? How are you understanding failure? What kind of policies are you including in these statements and what is the connection to your research? I ask that you spend a bit more time on this section and…
Auer, M. R. (2014). Collective Action and the Evolution of Social Norms: The Principled
Optimism of Elinor Ostrom. Journal of Natural Resources Policy Research, 6(4), 265-
271. Retrieved from http://www.tandfonline.com/doi/abs/10.1080/19390459.2014.941177 ?
Baytop, C. M. (2006). Evaluating the Effectiveness of Programs to Improve Educational
An American who spent sometime in Germany recounted his experience [Will Higher Gasoline Prices Inspire Lifestyle Changes, 2001] of energy prices in that country, "When I lived in Germany, the price of gasoline went from the equivalent of $2.50 per gallon to $3.25 per gallon over night. The Bundesregierung had added another $0.75/gallon gas tax, in addition to the existing $2.00 per gallon gas tax. (That's right: $2.75 out of every $3.25 per gallon was Federal taxes.)," He remembered the effect on prices on his use of transport, "I used the public transport system, easily the best in the world."
This is the direction our country will have to go too. Do we allow this country to be totally dependent on imported oil? Should we keep gasoline prices low to prevent development of alternatives or take necessary steps now to create a change in the present Gas Guzzling life style?…
Roberts, P., Bad Sports, Harper's Magazine. April 2001
Snead, M.C. And Martinez, R.D., Energy Prices and the Oklahoma Economy, Center for Applied Economic Research, Oklahoma State University, September 2004
Yetiv, S.A., America benefits from high oil prices, retrieved from Internet on 21st May 2006, http://www.signonsandiego.com/uniontrib/20060206/news_mz1e6yetiv.html , February 6, 2006
hen gasoline prices are low, as they were in July 2003, families spend an average of 4.6% of their median incomes on gasoline; but when prices spike, as they did in July 2008, households spend more like 11.5% on gasoline (Ma, 18).
So what can consumers do vis-a-vis shopping for groceries when gasoline prices take away significant portions of their disposable incomes? Firstly, on page 21 Ma explains that smart shoppers go to warehouse club centers and "supercenters" where prices are lower due to the mass volumes of products sold there. Yes, Ma admits, supercenters and warehouse clubs may be further away than local grocery stories, causing more gasoline to be used; but on the other hand, customers buy in bulk at those outlets, reducing "the number of shopping trips" necessary (21). Secondly, smart grocery shoppers turn to "private labels" on food products that are as a rule 20% to…
Courtemanche, Charles. "A Silver Lining? The Connection Between Gasoline Prices and Obesity." Economic Inquiry, 49.3 (2011): 935-957.
Kilian, Lutz. "Explaining Fluctuations in Gasoline Prices: A Joint Model of the Global Crude Oil
Market and the U.S. Retail Gasoline Market." The Energy Journal, 31.2 (2010): 87-111.
Ma, Yu, Ailawadi, Kusum L., Fauri, Dinesh K., and Grewal, Dhruv. "An Empirical Investigation
Natural Gas Supply, Demand and Pricing
Over the past 15 years there has been a significant transformation both in natural gas supply and natural gas consumption. Wellhead price deregulation has permitted natural gas prices to adjust freely to prevailing supply and demand conditions, and open-access transportation has allowed natural gas volumes to move freely from producers to consumers. As a result of industry restructuring, natural gas supply, demand, and prices are now subject to competitive market forces, which are largely responsible for recent efficiency gains in natural gas production.
The weather is the largest single factor affecting natural gas cost and it is also the most difficult to predict ("America's Natural Gas Supply Challenge").
Most utilities use storage as a hedge against higher prices as gas purchased and stored in the summer is typically lower priced than gas purchased during cold winter months. Storage gas can then be used in…
"America's Natural Gas Supply Challenge." American Gas Association. 2004. American Gas
Association. 16 June 2005
"Natural Gas Price in Canada." National Energy Board. 2005. National Energy Board. 16 June
The enclosed project contains a summary of operations for Kinder Morgan's Earnings, Cost of Capital, Target Multiples, and various assumptions that were used to construct pro forma financial statements and valuation summaries.
The natural gas industry has changed dramatically, and is much more open to competition and choice. Wellhead prices are no longer regulated; meaning the price of natural gas is dependent on supply and demand interactions. Interstate pipelines no longer take ownership of the natural gas commodity; instead they offer only the transportation component, which is still under federal regulation.
There are about 160 pipeline companies in the United States, operating over 300,000 miles of pipe. Of this, 180,000 miles consist of interstate pipelines. This pipeline capacity is capable of transporting over 148 Billion cubic feet (Bcf) of gas per day from producing regions to consuming regions?, and 123 natural gas storage operators, which control…
As the term suggest, liquefied natural gas (LNG) is natural gas that has been reduced to a liquid by cooling it to minus 161°C thereby eliminating oxygen, carbon dioxide and other unwanted components to achieve almost pure methane (Liquefied Natural Gas 2012). According to one LNG producer, "In the liquefaction process, impurities are removed from the gas before it is cooled. The cooling of natural gas to -162°C causes it to liquefy at which point it takes up 1/600th of its original volume. This allows the gas to be stored and transported safely and economically in large vessels" (LNG Liquefaction Process 2012, p. 2). Interestingly, Chandra (2012) points out that after natural gas is cooled to -- 161.5° C ( -- 260° F) and reduced, the actual volume shrinkage is about 610 times; however, 600 times reduction is typically cited in the literature. Because of its highly cooled and liquid…
Akimoto, K., Sano, F., Odo, J., Homma, T., Rout, U.K. & Tomoda, T. (2008). 'Global Emission
Reductions through a Sectoral Intensity Target Scheme.' Climate Policy, vol. 8, pp. 46-
Ben-Moshe, S., Crowell, J.J., Gale, K.M., Peace, B.A., Rosenblatt, B.P. & Thomason, K.D>
The product being studied is the Prius, the hybrid car from Toyota. The automobile industry is one the largest industries in the world. The major players are Ford, General Motors, Chrysler, Honda, Mitsubishi, Hyundai, several European companies and regional players as well (Investopedia, 2011). These firms all contribute to intense competition among rivals, especially given the size of the industry. The result is an industry characterized by competition both along the lines of differentiation and cost leadership. Firms must sell high volumes of cars at low margins in order to earn revenues, but must also load those cars with features and demonstrate technological leadership in order to attract business.
The large number of firms has an impact on the supply conditions within the industry. Supply is determined by expected sales and by the capacity of manufacturing facilities. In general, the global automobile industry suffers overcapacity. There are high costs…
AAAT. (2011). Auto transport business in auto industry slow down. All America Auto Transport. Retrieved December 3, 2011 from http://www.aaat.com/auto-transport-business-industry-slow-down.cfm
AP. (2008). Hybrid sales, led by Prius, up 38% in '07. MSNBC. Retrieved December 3, 2011 from http://www.msnbc.msn.com/id/24230209/ns/business-going_green/t/hybrid-sales-led-prius-percent/#.Ttq9o1b5sa8
Hirsch, J. (2011). Toyota Prius dealers see demand rise and inventories fall. Los Angeles Times. Retrieved December 3, 2011 from http://articles.latimes.com/2011/mar/31/business/la-fi-autos-disruption-20110331
Investopedia (2011). The industry handbook: Automobiles. Investopedia. Retrieved December 3, 2011 from http://www.investopedia.com/features/industryhandbook/automobile.asp#axzz1fQWPK54R
he line graph suggested a linear relationship between the price of oil and political events. he increases in the price of oil were linked to negative political events. Negative political events are events that threatened the political stability of regions or of specific countries. When these events occurred there was a tendency for the price of oil to increase along with the conflict or instability. Additionally, there was a decline in the price of oil when there was a fall in the economies of countries. A reduction in the demand for consumer goods would reduce the demand for oil and oil-based products. When there was worldwide negative phenomenon such as a recession, this would also reduce the demand for oil and consequently the price.
he relationship between these variables while not measured in the study was clearly described. Based on the description it would be reasonable to conclude that there…
The final element of the study that will be discussed is that of the hypothesis. A hypothesis is a statement of the relationship between the two or more variables. This statement is usually tested statistically to show whether the hypothesis should be accepted or not accepted. There are two hypotheses the null and the alternate. The null hypothesis suggests that there is no relationship between the variables, or no difference between groups. The alternative is the opposite of the null and is generally the hypothesis that the researcher wants to prove or support.
In this study there was an implicit hypothesis suggesting that there would be no significant increase in the production of oil between the years 2009 and 2010. The use of the term significant suggests that any increase must be demonstrably higher than chance. In most research this risk is placed at 5%. The level of significance is the probability of rejecting the null hypothesis if the hypothesis is true. An example of this is the determination that oil production in Nigeria increased significantly. This significant increase means that the events discussed in the article such as the improvements to the pipeline system and the political stability are statistically linked to the increase in oil production.
The article suggested many of the statistical principles as it described the changes in oil price globally. The relationships suggested in the article demand further explication through research. The line graphs clearly showed how the fluctuations in prices are related to external global events and internal political challenges.
promoting fuel efficient cars, establishing green spaces or forestry, random emission testing, and encouraging alternative transportation, walking, and bicycle use. The total cost is $15.5 M.
Fuel efficient cars
Fuel efficient cars not only reduces pollution but I chose it due to the fact that it is also a good option given today's rising gas prices.
Fuel efficient cars come in 2 categories -- electric and water. What this means is that these cars substitute gas -- which pollutes the atmosphere -- with either electricity or water or hydroxyl.
Hybrid cars are healthier for the environment since they combine gas and water (or electricity) producing lower emissions. They also reduce dependence on fossil fuel which is the main source of fuel today.(Future-Method.com)
The trade-offs of fuel efficient cars are first and foremost price. That, however, can be overcome by compelling distributors to lower the price by making it a more…
Future-Method. Fuel Efficient Hybrid Cars -- Initiatives to Reduce Pollution. http://www.futuremethod.org/418/fuel-efficient-hybrid-cars-initiatives-to-reduce-pollution
The benefits of alternative transportation http://www.scdhec.gov/administration/library/CR-007047.pdf
Supnithadnaporn, (2007), Do Vehicles Passing Emission Test Pollute Less-Georgia Institute of Technology http://www.spp.gatech.edu/faculty/WOPRpapers/AnupitWOPRFinal.pdf
This question would be better answered either a) if the case had been supplied or b) if I was a petroleum production engineer.
In order to determine the impact of changes in the price of crude on the price of gasoline at retail, the different cost components need to be considered. The U.S. Energy Information Administration outlines the different components that contribute to the retail price of gasoline. The four key drivers of gasoline prices are the price of crude; refining costs and profits; distribution and marketing costs and profits; and taxes. There are also profit margins to retailers and possibly other actors in the industry as well that need to be considered. All told, as of 2009 the breakdown of the different components assuming an average price per gallon of $2.34 at retail was as follows: 61% crude oil, 18% taxes, 11% refining costs and 10% distribution and…
Clayton, M. (2010). Offshore drilling moratorium: Good for the Gulf, bad for the economy? Christian Science Monitor. Retrieved May 9, 2011 from http://www.csmonitor.com/USA/Politics/2010/0727/Offshore-drilling-moratorium-good-for-the-Gulf-bad-for-the-economy
CIA World Factbook: United States. (2011). Central Intelligence Agency. Retrieved May 9, 2011 from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
EIA.gov. (2010). Factors affecting gasoline prices. Energy Information Administration. Retrieved May 9, 2011 from http://www.eia.gov /energyexplained/index.cfm?page=gasoline_factors_affecting_prices
Goldfarb, Z. (2011). Obama slams oil company profits as gas prices surge. Washington Post. Retrieved May 9, 2011 from http://www.washingtonpost.com/blogs/political-economy/post/obama-slams-oil-company-profits-as-gas-prices-surge/2011/04/29/AFwx7wHF_blog.html
Marathon Oil's product process appears to be a well functioning and smooth operating system. Their revenues and incomes, noted in the billions of dollars, represents the hard work of the management and its contributions to the company and is ultimately demonstrated in this pipeline system. Marathon has six phases of transforming crude oil into a deliverable product that takes approximately 5 weeks to accomplish. The six phases include: Crude oil, Crude oil Pipeline, Refining, Production Pipelines, Terminals, and the final stage Stations. During these six separate events the true efficiency of the system is tested.
It is worthwhile to analyze and dissect each of these phases in order to test for weaknesses and investigate ways to improve efficiency that will contribute to the profits of this organization. Each one of these phases has, in my opinion, certain strengths and weaknesses. Some phases seem to have more moving parts than others…