Case Presentation_Oil Price

8/8/2019 Case Presentation_Oil Price

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THE GLOBAL OIL PRICE:

DEMAND SIDE VS. SUPPLY SIDE

FACTORS

:G roup M em bers

Anup Mandvariya BowenLu

Hang LiHarry Wu

Hualing ZhengJoJo Wu

Tarasha Bhasin

Vivek Avari

DSME 6010 WManagerialEconomics

Case PresentationCase Presentation


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Introduction

World Primary Energy Demand

Mtoe

0

5 ,000

10 ,000

15 ,000

20 ,000

19 80 2000 2006 201 5 2030

O il C oa l G as B iom as s N uc lear H ydro O the r renew ab l

:Oil the major primary energy source


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IntroductionDistribution of Proved Reserves


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IntroductionCrude Oil Prices


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Easy oil is finished

New technology increase the oilproduction cost: Deep water oil; Oil

sand Strict rules for oil industry: BP

accident; Low carbon

requirement(carbon capture &storage)

Currency change rate and Interestrate: QE2

Introduction


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US dollar index & Oil price

Oil price( / )$ barrel

US dollar Index

Introduction


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Region wise consumption: The industrialized nations are the largest consumers

Demand Side Factors


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Most regions use more oil for heatand power than for

.transportation

There is a swing in consumption

.during winter

Demand Side Factors


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Demand Side Factors


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Demand Side Factors

Demand for crude oil is derived.demand as well

Prices of substitutes serve as a

.determinant of price OPEC estimates for global

.consumption


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Demand Side Factors

- ,In the short term demand for crude.oil may be mismatched

,In the longer term alternatives.can reduce crude oil demand


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Demand Side Factors

The world is facing a decline in.discovery of new deposits of petroleum

A decline in production caused by the.depletion of present resources

By 2010 the demand and supply gap

would increase by 2 million barrels per.( : )day Source IEA


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Supply Side Factors

v Terror premium an estimated extra $10 per barrel on price

uncertainty to supply


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Supply Side Factors

v Faster Exhaustion Rate Than Discovering Rate We consume three times more oil than we discover. We are living

on borrowed time.

Oil Discovery Versus OilConsumption


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Supply Side Factors

v Inventory m anipulation

A fear that the oilprice w ould crash dow n m aintain stable price by keeping low oil

inventory


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Supply Side Factorsv Unconventional Sources of Oil Extraction is financially unfeasible


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Supply Side Factors

To conclude, due to the supply-side factors, the global oilsupply remains relatively constant compared with theincreasing demand. Therefore, global oil price will increaseas the demand rises.

: :// . . /Source http omrpublic iea org


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Conclusion Short-Term impact on Supply and

Demand Curves The rise of emerging markets has also

changed the supply and demanddynamics. The demand increases and

the curve moves to the right. For anygiven level of price, more oil isdemanded and price rocketed


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Conclusion

Short-Term impact on Supply and

Demand Curves Because OPEC supply so much of the

worlds oil, any restricting of supplyby OPEC causes the blue supplycurve to move to the left, and theprice rocketed.


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Conclusion Long-Term impact on Supply and

Demand Curves Over the long-term, high oil prices will tendto encourage consumers to either reduceenergy consumption or shift to other formsof energy. Similarly, investment in either

inhospitable areas or in developingtechnologies will result in greater quantitiesof oil or synthetic crude coming on to themarket.

Thus demand will shift to left (decrease) and

supply will shift to right (increase) leadingto drop in the price.

However short term im acts will be effective

Case Presentation_Oil Price

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