Oil PRICES expected to rise The situation Prices

Oil: PRICES expected to rise?

The situation

Prices HIGH!!!

A slow down in economic activity

GENERAL IDEA DEMAND < SUPPLY

SURPLUS

Strange. . • According to the laws of supply and demand, prices should have decreased. Instead, they increased almost 25% in that time - from $87. 79 to $110. 21 a barrel. (Graph)

External factors • Its developing into an financial asset than just a mere commodity. • Currency’s (strength of $). • Sudden craze for investment.

Speculators

Potential Customers

Subsidies

Price ($) Elasticity of demand Quantity demanded

OPEC(Organization of Petroleum Exporting Company) • 1. To co-ordinate and unify the petroleum policies of the Member Countries and to determine the best means for safeguarding their individual and collective interests; • 2. To seek ways and means of ensuring the stabilization of prices in international oil markets, with a view to eliminating harmful and unnecessary fluctuations; and • 3. To provide an efficient economic and regular supply of petroleum to consuming nations and a fair return on capital to those investing in the petroleum industry.

Supply and Demand for Oil before , during and after the recession. 1= 2006 2= 2008 3=2009 Recession ends + subsidies introduced. PRICE ($) D 3 D 1 S 1, 2 S 3 D 2 QUANTITY DEMANDED(PER GALLON)

Winners!! STAKEHOLDERS Losers…. . Unknown. . !!!? ? ?

ALTERATIVES • EFFICIENCY • SUBSTITUTES • GOVERNMENT TOOLS • DIREGARD SPECULATORS

Final decision… Hmmm… • TOP THREE! - (they’re mutually exclusive)

• Thank you