Article Analysis: Demand and Supply

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Topic: Demand and Supply
Headline :" Oil supply cannot match demand"
Source: Economic Time (From BBC News)
Date:13 Nov 2012

Summary

Analysts realised the oil supply cannot keep up with demand has fuelled another jump in prices around the world . Although the Kuwait's company came out to rescue the situation ,the market are proving far more thirsty than analysts' assuming . A lot of countries have started to store oil ,and this also caused the subtle oil .In the end ,this will result the price of oil to increase significantly.

Related Economic Concepts

Supply :The quantity which producers are willing and able to make available for sale at different prices,in a specified time period , ceteris paribus.

Demand :The quantity which people are willing and able to buy different prices,in a specified time period , ceteris parbus.

Economic Analysis
As tje limited oil resource, and rising for the oil demand for the world , the oil supply have could not match the demand.As mentioned in the article .Major oil producing countries are adding an extra 2 million barrels per day ,there is also no any effect about the situation of rising demand. As the result price of oil is keep rising , which bring a lot of difficulties for some developing and less developed countries.

Conclusion
Lacking of oil supply cause price to increase significantly .If prices rise further and stay elevated for a period of time the global recovering could be in damage .Even the demand will decrease a little bit. But it also will be a inelastic demand in the end. If another discruption affects supply like was and disasters occur , prices could spike very quickly, with potentially dangerous implications .There is very little that major economies can do to affect the oil market in the shourt term ,but they can the game in the fules and instituing carbon taxes.
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