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Effects of the price of crude oil
Impact of rising oil prices on the economy
Impact of rising oil prices on the economy
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Recommended: Effects of the price of crude oil
Pricing Petro Products in India: Fiscal (Taxes) & Welfare (Subsidies) – Equity, Efficiency & Revenue Considerations (May 2014)
Manish Baghla, PhD Student, TERI University
Economic effects of Oil prices in India
The importance of oil to the modern world is unique in character and far-reaching in scope. It is a singularly autonomous variable in the world economy and it is used inter alia for transportation, heating and production.
In India, Petroleum products are used in Agriculture, Sugar mills, Power generation, Mining & Quarrying, Transport (Road, Shipping, Railways), Manufacturing industries (Civil, Iron & Steel Metallurgic, Textile & Fibre, Cement, Ceramics & Glass, Chemicals, Aluminium, Electronics, Fertilizers, Other consumer & industrial goods). End-use of various petroleum products in India is listed in Table 1.
A sharply higher oil prices can set difficult economic challenges for oil importing economies as it can simultaneously slow economic growth while stoking inflation. In net oil-importing countries, high and volatile oil prices ripple through the numerous segments of the economy. As prices move up and down, so does the cost of production, which has far-reaching effects on the economy, fiscal and trade balances, businesses, and household living standards. As Petroleum Products consumption form significant part of economy, oil availability and prices thus affect the output capacity, rate of growth and level of inflation and hence oil price fluctuations can have important macroeconomic repercussions depending on the composition of oil sector in the economy.
High and volatile oil prices affect economies at both a macro and micro level. For an Oil import dependent economy, the major direct effects at the macro level ar...
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...years. And therefore, the government has to retrieve administrative means.
Another section of this Paper discusses previous oil pricing systems and steps implemented by Government of India for reforming Indian Petroleum sector market. Then the Indian Government & regulatory institutional layout with reference to current pricing of petroleum products to oil will be discussed.
In this Paper emphasis will be laid on the oil pricing systems since 1998 when India started reforming Indian Oil sector which coincided with sharp rise in global prices. In the conclusion, suggestions will be made for developing Indian oil market with future directions on policy on petroleum products pricing and taxation.
Macroeconomic impact of Oil prices in India
In an oil import economy, impact of rise in oil prices is eventually borne by households as explained below through the Table.
In conclusion, Oil impacted social change over time, which helped us grow as a society. If you took my proposal into consideration I would really appreciate it. My proposal is going to have all of the factors of Oil and how oil has change our state. After reading the documents that you have given me I was able to answer question “What story should be told”. As H.L hunt always said “money is just as way of keeping score”. - H.L
As an emergency response coordinator for a refinery it is vital to understand what hazards are associated with the products found in a crude oil refinery. Routine and non-routine maintenance will need to be done in order to maintain a working and operating oil refinery. This can create complicated situations or scenarios, because numerous contractors may be brought in for different repairs. This can lead to accidents in some cases because of the wide range of things going on in the refinery. Training and communication will be vital for a safe work environment with multiple entities working. Documentation of the training will also be crucial.
In 2004, crude oil producers around the world expected a 1.5% growth in the world’s demand for crude oil. The actual growth rate was more than double the projections at 3.3%. This growth was due to rapidly industrializing of foreign countries such as, China and India. Therefore the lack of crude oil affected the supply of gasoline to consumers at the pump.
People need oil for daily life and work. Since World War II, oil has caused many serious problems in the United States and throughout the world. Remarkably, economic and social problems were heightened by the emerging energy crisis. By 1974, the United States gained a third of its oil by importing from the Middle East. James Oakes, et al.
The United States has had several scares throughout its history in terms of oil, most turn out to be over exaggerations of a small event. However, these scares highlight a massive issue with the U.S. and that issue is the U.S.’s dependence on foreign oil. Why does it matter that our oil should come from over seas? In a healthy economy this probably wouldn’t be as relevant, but the U.S.’s economy is not exactly healthy at the moment. There are 4 things that I would like to address: what the problem is, how it affects us, what some solutions are, and what solutions I feel are best.
After several years shopping at Petco, I have decided to stop shopping for four main reasons:
Currently, the most important factor in the rise of gas prices is the increasing cost of crude oil. Unfortunately, the United States has three percent of the world’s oil reserves. (Horsley) In 2009, the United States was third in crude oil production as well as the world’s largest petroleum consumer. (e. I. Administration) Such consumption required and still requires the United States to import petroleum/crude oil from other countries.
In 1970 oil reserves became more scarce, leading to a decrease in production, while consumption continued to grow rapidly (Wright, R. T., & Boorse, D. F. 2011). In order to fill the gap between rising demand and falling supply of oil, the United States became more and more dependent on imported oil, primarily from Arab countries in the Middle East. (Wright, R. T., & Boorse, D. F. 2011). As the U.S and many other countries became highly industrialized nations, they became even more dependent on oil imports. With demand being higher than the actual amount of supply, prices kept rising reaching a peak of $140 a barrel in 2008. (Wright, R. T., & Boorse, D. F. 2011).
The increase in oil prices can also effect the supply and demand for goods other than oil, Econ made clear that the prices to produce them increase causes more of a economic issue. This is causing economic fluctuations and no one is doing anything to stop it.
" Oil is the life blood of our modern industrial society. It fuels the machines and lubricates the wheels of the world’s production. But when that vital resource is out of control, it can destroy marine life and devastate the environment and economy of an entire region…. The plain facts are that the technology of oil-- its extraction, its transport, its refinery and use-- has outpaced laws to control that technology and prevent oil from polluting the environment…" (Max, 1969). Oil in its many forms has become one of the necessities of modern industrial life. Under control, and serving its intended purpose, oil is efficient, versatile, and productive. On the other hand, when oil becomes out of control, it can be one of the most devastating substances in the environment. When spilled in water, it spreads for miles around leaving a black memory behind (Stanley, 1969).
Global demand for oil; developing countries such as China have the potential to drive demand for oil and put inflationary pressure on prices as supply outweighs demand.
Crude oil is a strategic product, in the sense that it is a most necessary fuel for all industries of nations in the world. While crude oil is a most strategy input for productions, transportations, and national defends, whoever have control over this source of energy will dominate over other countries, so in addition to supply and demand factors that affect the price, consumers must pay attention to the producers and export countries that can use this product as a weapon. Such as during and after the 1973 Arab-Israeli War, the oil giant Saudi Arab, members of the Organization of Petroleum Exporting Countries (OPEC) imposed an oil embargo against the United States and other Western European countries, which including the Netherlands, Portugal,
In order to fully understand the Wests urge of control over Middle Eastern oil, one must recognize the forms that those energy resources come in; given the importance of oil in almost everything produced, controlling the basic component would significantly affect the market. Petroleum products, in all of their forms, are used in four major sectors: transportation, ind...
Rangarajan Committee. Report of the Committee on Pricing and Taxation of Petroleum Products. Expert Committee Report, New Delhi: Government of India, 2006.
The work required of this paper is not easy. It takes a lot of patience in finding the right mix of materials that would produce the kind of output the student wants to find out and to prove his thoughts about the subject matter. Considering that the subject matter is highly technical, one has to patiently go through the rigors of reading lots of materials, comparing and writing down notes and drawing conclusions for one self. How one appreciates the subject matter and his researched work truly reflects how this paper, as a whole, is well thought about, understood and presented. It is hoped that at the end of this paper, one is able to get the bigger picture about the processes involved in the petroleum system, from its source to trap, and that he can draw for himself, in layman's terms, how processes can be understood by ordinary people.