The role of petroleum products in our lives is unquestionable. It is safe to say that oil is the cornerstone of our civilization. A pessimist might argue that without oil our industrial society will collapse and there will be rapid decline in the world population. But again that is a pessimist’s view, personally we would like to think that we will in near future find other energy sources on which we can depend and build our civilization to reach the next milestone. In this report we have tried to highlight the fluctuations of crude oil during the period of 2001-10. The scope of this report is limited only to this period as we believe that events that took place during this decade had the potential to change the oil game so to speak. We have tried to cover almost all the major countries while analyzing the oil prices throughout the decade. We will start off with a small note on Peak Oil theory, after which we will move on to yearly analysis of crude prices for the decade and the future trend based on the previous scenario and present conditions will mark the end of the report.
PEAK OIL THEORY:
At this point of time we would like to refer to the Peak Oil theory, which states that the oil is an exhaustible resource (no surprises there!) and it will reach a maximum point of production. “Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline.” The peak story tells us, indeed, that after rising over years, decades or centuries, production will enter a phase of decline. The peak could take different shapes however. It could appear as the apex of an acute angle, or stretch out over a long period in the form of a plateau, or emerge more than once in the shape of a saddle or as a chain of dunes.
* Image taken from Wikipedia free archives.
 Did Wikileaks Just Confirm Peak Oil?". CNBC. February 9, 2011 “The authors and promoters of the peak oil theory clearly understand that a prediction must relate to the date at which the relevant event – the production peak – will occur. They did indeed stick their necks out and told us once that the peak will be reached in the late 1980s, then in 2000, then in 2005. They proved to be wrong on all occasions. World oil production is still rising year after year.”  It is to be noted that here peak oil theory has been referenced to as the recent predicted peak by some scholars following this school of thought falls inside the decade under consideration [2001-10]. This will be discussed later.
 Oxford Energy Comment September 2006, Oxford Institute for Energy Studies page 2-3 YEARLY ANALYSIS
The above figure represents the general trend in the price of oil (in 2008 dollars- inflation adjusted) with respect to the major world events that took place since 1970.
Monthly Prices in US:
| 2001 Average
The crude prices had been maintaining the steady level of $23-24 all round the year. The Russian oil production increased because of which US economy went downward but the major shock this sector experienced this year came in the form of 9/11 attacks on the World Trade Center. Although the total imports for energy sector done by US equals about 15% of its GDP, no price shock with negative impact on its GDP was experienced in this instance. The only immediate affect was that New York Mercantile Exchange (Nymex) remained closed. It serves as a mechanism for the important function of price “discovery”– the determination of current and future prices. Oil industry entities use as reference points publicly visible and instantly available prices established in markets such as Nymex,...
Please join StudyMode to read the full document