BUS 305 Module 2 Case Assignment

BUS 305 Module 2 Case Assignment - Oil Prices: Demand and...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Oil Prices: Demand and Supply Robert J. Blair Trident University International BUS 305 Module 2 Case Assignment DR. Babb 7 May 2011 Oil Prices: Demand and Supply 1. What are three factors that might explain why oil prices are high? An increasing demand coupled with a supply shortage is a contributing factor to high oil prices. The demand for oil has increased during the last decade. Nations such as China have been growing and developing at a faster rate causing an increased consumption of oil.(Emerson, 2008/ Anderson & Buol, 2005) While the demand for oil has been increasing the supply has not kept up. Natural disasters such as hurricanes and earthquakes in producing and refining countries; wars and conflicts in countries like Nigeria, Iraq, Iran and Venezuela; and politics such as the banning of oil drill in the Gulf of Mexico have all contributed to a decrease in supply. (Chinaview.cn, 2007/ Emerson, 2008) A lack of viable oil substitutes is another factor contributing to higher oil prices. With alternative fuel sources such as solar energy, propane, electricity, hydrogen, corn fuels, and more we obviously don’t lack substitutes. The problem is that we have not developed the refining and using process of these substitutes to a point that they can be viably use to replace oil. As long as oil remains the cheapest and most efficient source of energy we have, it will be a resource that controls our economy.(Emerson, 2008) Finally, the falling strength of the U.S. dollar is a contributing factor to high oil prices. In the world economy everything is given a value based off the U.S. dollar. This is great for the U.S. when the dollar is strong compared to the currency of other countries because we are then able to buy more with our dollar than they can buy with theirs. Unfortunately we get the opposite effect when our dollar is weaker than other countries currency. As our dollar weakens we have to use more of them to buy the same thing. Since oil is priced in U.S. dollars, its price rises as our dollar weakens.(Emerson, 2008/ Chinaview, 2007) 2. Which two countries are the largest consumers of petroleum products? The United States of America and China are currently the largest consumers of petroleum products. Ever since it was discovered how to refine oil, the U.S. has been the number one consumer of petroleum
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
products. In 2004 however, China’s demand for oil surged only one year after they took the number two spot for consumption of petroleum products.(Anderson & Buol, 2005/ Emerson, 2008) As long as these two countries continue to grow and develop while producing and increased amount of products, they will
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/18/2011 for the course BUS 305 taught by Professor Dr.benjaminyeo during the Spring '11 term at Trident Technical College.

Page1 / 4

BUS 305 Module 2 Case Assignment - Oil Prices: Demand and...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online