A PROJECT REPORT
DEMAND, SUPPLY & ELASTICITY
Karan Chopra (2012137)
Manik Grover (2012155)
Nancy Pande (2012178)
Nayan Sharma (2012182)
Nitya Agarwal (2012188)
Crude oil is a naturally occurring substance (i.e., “Fossil Fuel”, formed from organic remains over a period of millions of years) found in certain rock formations in the earth. It is a dark, sticky liquid which, scientifically speaking, is classified as a hydrocarbon. Crude oil is highly flammable and can be burned to create energy. Derivatives from crude oil make an excellent fuel.
Measuring Crude Oil
Crude oil is measured in barrels. When crude oil first came into large-scale commercial use in the United States in the 19th century, it was stored in wooden barrels. One barrel equals 42 US gallons, or 159 liters. In some cases crude oil is also measured in tons. The number of barrels contained in each ton varies depending on the type and specific gravity of each crude, however the average number considered would be around 7.33 barrels per each ton.
Factors Affecting Demand
A significant factor on petroleum demand has been human population growth. Oil production per capita peaked in the 1970s. The world’s population in 2030 is expected to be double that of 1980. There are speculations or predictions that oil production in 2030 will have declined back to 1980 levels as worldwide demand for oil significantly out-paces production. Oil production per capita has declined from 5.26 barrels per year (0.836 m³/a) in 1980 to 4.44 barrels per year (0.706 m³/a) in 1993, but then increased to 4.79 barrels per year (0.762 m³/a) in 2005. In 2006, the world oil production took a downturn from 84.631 to 84.597 million barrels per day. This has caused the oil production per capita to drop again to 4.73 barrels per year (0.752 m³/a).One factor that has so far helped ameliorate the effect of population growth on demand is the decline of population growth rate since the 1970s, although this is offset to a degree by increasing average longevity in developed nations. In 1970, the population grew at 2.1%. By 2007, the growth rate had declined to 1.167%. However, oil production is still outpacing population growth to meet demand. The world increased its daily oil consumption from 63 million barrels in 1980 to 85 million barrels in 2006. The demand side of Peak oil is concerned with the consumption over time, and the growth of this demand. World crude oil demand grew an average of 1.76% per year from 1994 to 2006, with a high of 3.4% in 2003-2004. World demand for oil is projected to increase 37% over 2006 levels by 2030 (118 million barrels per day (18.8×106 m3/d) from 86 million barrels (13.7×106 m3), due in large part to increases in demand from the transportation sector.
Energy demand is distributed amongst four broad sectors: transportation, residential, commercial, and industrial. In terms of oil use, transportation is the largest sector and the one that has seen the largest growth in demand in recent decades.
Medium-Term Oil Prices, 1994-2008 (not adjusted for inflation).
In terms of 2007 inflation adjusted dollars, the price of oil peaked on 30 June 2008 at over $143 a barrel. Before this period, the maximum inflation adjusted price was the equivalent of $95-100, in 1980. Crude oil prices in the last several years have steadily risen from about $25 a barrel in August 2003 to over $130 a barrel in May 2008. These prices are well above those which caused the 1973 and 1979 energy crises. This has contributed to fears of an economic recession similar to that of the early 1980s. One important indicator which supported the possibility that the price of oil had begun to have an effect on economies was that in the United States, gasoline consumption dropped by .5% in the first two months of 2008, compared to a drop of .4% total in 2007. However...