1. What are three factors that might explain why oil prices are high?
Though there are so many reasons for oil prices to rise or drop, three major factors are
supply, demand, and greed.
The first factor for high oil prices is scarcity of supply.
have become dependent on Light Crude Oil, found mostly in the Middle East, there is a
significant amount of Heavy Crude available for production, found in Canada, Saudi Arabia, and
However, extracting Heavy Crude from the ground is more challenging, as is
the costs and efforts of production; approximately four times as much.
Some of the best light
crude is found in Libya, which is currently in a state of turmoil.
The internal strife between the
Libyan government and rebel forces has caused the shipping ports to close for many periods of
time, thus oil supply hasn't met demand, further causing oil prices to rise.
When war affects oil
producing countries, such as what is occurring in Libya and Iraq, supply is disrupted, and there
exists an difficulty in meeting world demand.
Which brings me to a second major factor to high
oil prices; demand.
The top four countries placing high demand on the oil market are the United States,
European Union (though a conglomerate of countries interlocked on one continent), China, and
Japan (CIA World Factbook, 2011).
Much of this oil is not only for transportation or heating
needs, but for production needs as well.
Products made from varying degrees of plastics are on
Plastics require oil in their production process.
The largest consuming countries of oil
are also home to many production plants turning out products made from oil.
in our lives is made from oil, made by machinery and systems dependent on oil, and transported
by oil as either gas or diesel fuel.
To name just a few products which require oil in their
production: Ammonia, Anesthetics, Cosmetics, Crayons, Credit Cards, Shampoo, Shaving
Cream, and Shoes.
To see a larger list, 144 of 6000 items, visit the Rankin Energy Corporation