Hydraulic Fracking Effects

Abstract

Early in the past century, oil has powered and has had negative effects on the United States and world economy. Towards the end of the 20th century, as economies relied more on oil powered means for their everyday need, their need for oil has considerably increased and this put an upward pressure on the global oil demand. The disparity between supply and demand has had different effects on economies. For example, high supply leads to low cost, and low supply leads to high cost. On the other hand, high demand leads to high cost and low supply leads to low cost. It’s just a repetition of events. OPEC and ISIS are trying to get the fracking (or hydraulic fracturing, is the process of extracting natural gas from shale rock layers deep

within the earth) industry out of business and after all that happens, the price will shoot up high, and that will make us humans a better living, a better economy, and a better world. In other words, we will be forced to make our economy eco and earth friendly instead of using this earth destructive oil. Another disadvantage to high prices is that many families will go bankrupt, and will have to rely on mass transit systems. We interviewed many people, and they said that oil prices were below $1. They also said that grocery prices will go up due to shipping. In conclusion we want OPEC and ISIS to stop affecting our economy, hence wanting normal oil/gasoline prices.

Table of Contents

Abstract……………………………………………………………………………………..Page 1
Table of Contents…………………………………………………………………………...Page 2
Purpose……………………………………………………………………………………...Page 3
Background Research……………………………………………………………………….Page 4-8
Discussion…………………………………………………………………………………...Page 9-15
Conclusion…………………………………………………………………………………..Page 16
Acknowledgements………………………………………………………………………….Page 17
Bibliography…………………………………………………………………………………Page 18

Purpose
Our purpose for our project was born due to our oil industry being consistently affected/ controlled by OPEC and ISIS. We wanted to find out how these organizations are affecting our economy. In addition, we wanted to find out how the fluctuations of oil prices affect our economy.

Background Research:
Nobody knows precisely how oil was made. Yet there are two hypotheses that clarify how the substance may have started. The principal hypothesis proposes that oil is a fossil fuel - importance it is made out of dead plants and creatures that existed countless years back. In the wake of breaking down over the ages, the concoction mixes of the remaining parts separated and structured what we now call oil.
A few researchers trust in an alternate hypothesis. Twentieth-century Russian researchers proposed the "abiotic" hypothesis, which expresses that oil originates from close to the world's center, where it inevitably streams, much like magma, into puddles underneath the world's hull.
Oil can be found on the greater part of the world's mainlands. A few spots, in the same way as Australia, have practically nothing. Yet nations that have huge supplies of oil end up as key players on the world stage. When its all said and done, they are perched on top of pools of a standout amongst the most imperative assets on the planet.
Oil is generally measured in barrels, and 1 barrel = 42 gallons. Specialists say that there are in regards to 1.3 trillion barrels of oil. In the event that you've ever perused anything about the Middle East, then you positively realize that it is the focal point of the world's oil supply. The area sits on top of a fluid gold mine - masters evaluate the locale holds more than 700 billion barrels of oil in its different fields and saves, or about 56% of all the world's assets.

The country that has the most oil - in not simply the Middle East, yet the whole world - is Saudi Arabia. The kingdom, likewise the otherworldly home of Islam, apparently has more than 250 billion barrels. The other Middle Eastern countries with sizable amounts all have around one-50% of Saudi Arabia's stores. They incorporate Iraq, Iran, Kuwait and the United Arab Emirates. Altogether, the locale's unfathomable supplies of oil make them a vital piece of the world economy.
The nation has the second-biggest measure of demonstrated oil saves on the planet is Canada. It has near to 200 billion barrels inside its fringes. Be that as it may, a lot of these stores are found in Alberta's "sand pits", a landscape that makes the oil harder to concentrate from the earth than it is in different nations. Then again, innovative advancements are normal, after some time, to make extricating oil spotted in this sort of territory less demanding.
Different countries with extensive repositories of oil include:
Libya
Venezuela
Nigeria
Mexico
Indonesia
the EU countries
Brazil
China

Before oil can be utilized, it must be separated in a procedure known as "refining." After being acquired, oil is sent to different refineries as far and wide as possible. In America, numerous (however surely not all) of the oil refineries are found in the Gulf Coast area. This is a motivation behind why oil expenses have a tendency to vacillate amid storm season - a huge typhoon, for instance, puts oil supplied at the refineries at danger of decimation. Refining oil lives up to expectations in a simple way. Unrefined petroleum is put into an evaporator and transformed into a vapor. From that point, the vapor moves into a refining chamber where it is transformed go into a fluid. Diverse sorts of oil are structured relying on the temperature they were refined at. Gas, for instance, is refined at cooler temperatures than leftover oils that are utilized to make items, for example, black-top and tar.
After the numerous substances produced using oil are prepared, they touch base in different items to do a tiny bit of everything, from warming our homes to controlling our autos.
It bodes well that the world's greatest economies would utilize the most oil. America, which has the world's greatest terrible residential item (GDP), likewise expends more oil than some other country. The U.S. utilizes 25% of the assessed 80 million barrels of oil created far and wide consistently. The expression "America's reliance on remote oil" is specified frequently in the media, especially in reference to American imports from the Middle East. Then again, this announcement doesn't precisely tell who supplies the United States. Around 34% of the majority of the oil America uses originates from stores found in the 50 states. The nation that fares the most oil to America is Canada, with Saudi Arabia second. The European Union (EU) likewise utilizes a substantial rate of the world's stores, experiencing roughly 14.5 million barrels day by day. Different countries who have substantial, secured economies - Japan, Canada and South Korea rank high on the rundown of the world's greatest oil buyers.
The one nation that may assume the greatest part in world oil utilization is China. China at present positions as the third-greatest oil buyer on the planet. Be that as it may with its dynamic and quickly developing economy, China's utilization of oil is estimate to become exponentially. Chinese examiners have said that China's interest for oil becomes by 7.5% a year. India and Brazil has been a helping component in the ascent of oil costs over the recent years.
These nations go about as the interest for the world's oil supplies. Then again, the way oil is valued does not reflect that of the free market.
One body has extraordinary impact over the overall cost of oil. The Organization of Petroleum Exporting Countries (OPEC), all the more usually known as OPEC, is a cartel involving 12 of the world's greatest oil-delivering countries, including the greater part of the real Middle Eastern states, Venezuela and Nigeria. As indicated by OPEC, this cartel controls 78% of the world's known oil saves. The significant oil makers not in OPEC incorporate Russia, Canada and the United States. Since OPEC's countries deliver such an extensive amount the world's oil supply, they can control the value every barrel relying on what number of barrels every day the gathering will offer on the table.

Oil is one of the world's most important commodities (Trade), and as a result, the nations that control the bulk of the world's supply have (and exercise) a great deal of power over its availability. The supply of oil in the world market has an impact on its price, and the fluctuations are passed on to consumers, especially in nations that use a lot of oil, such as the U.S. Oil prices are also determined by quality and ease of refining. Investors have the option of investing in oil futures, which themselves have an influence on the price of oil that is reported in the media. All in all, the oil market is quite complex, and a better understanding of how the oil gets from the ground to you, in all its forms, will help you to understand and deal with fluctuating prices.

Discussion:
In our time spent in researching on “How fluctuating oil prices affect the economy”, we have learned many things.

We have interviewed, read books, gone to websites, and even have first person eyewitnesses on how these oil prices have changed over the years. So first of all, going back to our background research, what is oil? Scientists propose that oil is a fossil fuel - importance it is made out of dead plants and creatures that existed countless years back. But how do we use dead plants and creatures to fuel our cars? Scientists created a process that we know as refining. This refines(to purify) the oil, and many useful materials come out of it, such as gasoline and kerosene. The more you refine the crude oil, you get things like jet

fuel.
As said in the previous paragraph, the more you refine crude oil, the more expensive things you obtain, such as jet fuel. Since you obtain more pure things, the cost goes up. For example, regular gasoline is cheaper than diesel fuel. They are both meant for the same purpose-to fuel cars, yet diesel is more pure, so it costs more. This is one reason for oil fluctuation. Another reason for oil fluctuation is the simple supply and demand. When supply is low, prices go up. When supply is high, prices go down. When demand is high, prices go up, and when demand is low, prices go down. This system of oil fluctuation impacts people is many ways. First of all, when oil prices are low, people save more money financially. When oil prices are high, many people have to rely on transit systems or carpool. Additionally, oil prices that are high will impact businesses. For example, truckers will have a hard time on the road and might push trucking companies out of business, or any other businesses that rely on gasoline. Additionally, it might force inventors to go towards the electric car.

Below is a graph that shows crude oil prices per barrel(1 barrel=42 gallons):

Below shows the oil change in the last 60 years:

To interpret these graphs, we see that crude oil reached its peak cost in August of 2013. From then on, oil kept fluctuating until it started to go down at a rapid rate during August of 2014. Before the 21st century, oil prices were extremely low. This was because there was obviously more oil in the earth than there is now. When we interviewed numerous people, we asked them,”What were the oil/gas prices when you started driving”. Our answers were stunning. People said that gas suddenly went up to $1.75. Others said that it was from $1-$1.75, and two people said that it was less than $1. But when oil prices peaked in 2013, why are oil prices going down now?
To answer that question, lets go back to our background research. Our background research explained that oil is most found in the Middle East, mostly in Saudi Arabia. Because of this, Saudi was the lead exporter of crude oil. More recently, however, ISIS(Terrorist organization) and OPEC(The Organization of the Petroleum Exporting Countries) has controlled most of the oil exporting. They recently said that they are putting no limit on how much oil they pump and export, so they are pumping and exporting as much oil as they can. Because of this, they intend to put fracking out of business. That said, what is fracking? “Fracking is the process of drilling down into the earth before a high-pressure water mixture is directed at the rock to release the gas inside. Water, sand and chemicals are injected into the rock at high pressure which allows the gas to flow out to the head of the well”. What ISIS and OPEC are trying to do is to lower the prices of oil, so that the fracking industry would go out of business. After that, the oil prices will go up at an extreme rate.

On January 19,2015, OPEC decided to slump the oil further to $25 a barrel, according to the article “Iran sees no sign of a shift within OPEC toward action to support oil prices, its oil minister said, adding its oil industry could ride out a further price slump to $25 a barrel”. Because of this, the oil industry is thriving while the fracking industry is losing money. But is OPEC really doing the right thing? if OPEC keeps doing this, oil will sell faster, depleting the world’s natural oil reserves.
Below is a graph that shows a predicted oil production in the next 65 years:

To interpret this graph, we see that the oil productions are at its peak right now. Then the oil production are predicted to go even lower than now. As stated in the other paragraph, ISIS and OPEC are trying to get the fracking industry out of business. And if so, the prices will go unbelievably high, because the demand will be high. However, that is only for a short period of time. When the prices go unbelievably high, we will be forced to use electric cars, mass transit, and everything that is earth friendly. We humans will realize at one point that if we keep the use of oil like this, global warming will take over and will not be able to live. This is why we will not need to use oil anymore. This is why the oil production is predicted to be going down in the next 65 years. Because of our oil use, we are emitting dangerously high levels of carbon dioxide.

\

Above is a graph of predicted Carbon Dioxide levels if oil prices keep going down, The more that oil prices will go down, the more that will be bought and used, Therefore, we will emit more and more carbon dioxide, and soon more that our Earth can handle, which would lead to another Ice Age.
As a final point, oil prices will continue to fluctuate until there is no more oil.

This has a large impact on the overall United States economy, and even the economy of the world. As mentioned earlier, OPEC and ISIS has taken complete control of oil over the past six months, to push the fracking industry out of business. If OPEC and ISIS keep doing this, we may see prices at $15 a barrel!!This may be good financially for families temporarily,but in the long run, after the fracking industry is out of business, we may see oil prices at $5-$6. This would hurt the economy substantially. Because oil prices are so high, it would push trucking industries and large businesses that rely on oil/gas out of business. When we interviewed people, they said that they each know at least one person who has gotten cut from Exxon or Chevron. Why is that? Low oil prices are providing gas stations with less profit.Because of this, Exxon is not making enough profit to pay the workers, so just because low gas prices are good for families, it isn’t good for the overall economy. And again, as soon as OPEC and ISIS pushes the fracking industry out of business, oil prices will keep plummeting. Until then, lets hope that prices will return back to normal and OPEC and ISIS does not control the oil industry negatively. As far as our concern however, our families will enjoy low oil

prices!

Conclusion
As from our research fluctuating oil prices have a huge impact on our economy. It is affecting us in many ways. Everyone relies on oil as people have to drive to work, buses have to go, and industries use it. It is a good and bad thing that the oil prices are going down. It is good as families can save money, and flights will get cheaper. It is bad as people who work with major oil companies will get out of work as they are not getting profits. More recently however, OPEC and ISIS wanted to push the fracking industry out of business. As a result, they lowered the price of oil. On January 19,2015, Iran and OPEC signed an agreement to reduce the oil prices to $25 a barrel. This will give the final push to push the fracking industry out of business. Then , afterwards, the prices of oil will skyrocket forcing us to invest in new things and use mass transit. There are pros and cons to this. The pros are that we are going to use more eco-friendly forms of transportation. Therefore reducing our annual carbon dioxide emissions. The cons to this are that grocery stocks are going to go down, due to the shipping costs. This is very scary to the older generation, because they were seeing oil/gas prices at under $1 a gallon. Aside from this, the basic supply and demand impacts oil prices. More supply leads to lower costs, and less supply leads to higher costs.On the other hand, high demand leads to higher costs, and lower demand leads to lower costs. In conclusion, OPEC and ISIS are reducing oil costs, which impacts the economy, as well as the basic supply and demand. Anyhow, us humans will find a solution to every problem, so even if our economy goes bad, we will persevere through it!