Analysis of Petroleum Price in World Market During Recession Period

Topics: OPEC, Peak oil, Petroleum Pages: 11 (3920 words) Published: September 28, 2011
List of ContentsIII
I. Preface1
II. Theories3
III. Contents
i.Factors that influence the price of petroleum in the world6 A. Limited resources6
B. Unlimited resources usage6
C. Inflation and economic crisis7
D. Petroleum Price Speculation8
E. Government Regulation8
ii.The Chronology Analysis of Petroleum Price9
A.Oil Prices in 1869-19679
B.Middle East Supply Interruptions10
C.OPEC Fails to Control Crude Oil Prices10
D.Prices of oil between 1980-198611
E.Oil prices in early of 1990’s11
F.Oil prices in 2000’s11
iii.The Depth Analysis on Petroleum Price During Recession Period12 A.1973 GLOBAL RECESSION13
IV. Conclusion18
I. Preface
As we know, petroleum is the limited resource. It’s only available in Saudi Arabian, Iraq, Iran, and some other countries. And the remaining accessible reserves are consumed more rapidly each year. This kind of problems cause petroleum’s price becomes very important in trading world, since so many countries still hang on to the other countries, which produce mass amount of world petrol. Therefore, it is possible for oil-producing countries to dominate the world oil price in the market. Thus a mechanism is needed to determine the price of oil on world markets so that measures taken advantage of all parties. Some of the factors that influence world oil’s price are demand and supply. Demand growth of world petrol is highest in developing countries. Developing countries can supply up to 2/3 of total world petrol but only demand 1/3 of it. The United States is the world’s largest consumer of petroleum. United States demand 2/3 of it. Although United States and other developed countries can only supply 1/3 of total world petrol. Besides demand and supply concerns, many other issues have also had some effect on oil prices. But here in this paper, we will focus on demand and supply. Our hypothesis is that during recession, the petroleum price will increase. The reason and analysis will be explained in next part. First, we will explain about theories: definition of recession, what is OPEC and what OPEC do to control petroleum price, petroleum price in world market, and the theories of demand and supply in the association with petroleum price. In part I, we talk about factors that influence the price of petroleum in the world. There are some factors beside demand and supply, such as limited and unlimited resources, inflation and economic crisis, petroleum price speculation, and government regulation. In part II, there is the chronology analysis of petroleum price. We’ll analyze about Middle East supply interruptions in 1972-1978, oil prices in 1869-1967, OPEC fails to control crude oil prices, oil prices between 1980-1986, oil prices in early 1990’s, and oil price in 2000’s. In part III we will discuss about petroleum price during recession period. Global recession happens six times from the first time until now. First recession happened in 1973, the second is in 1979, and then after 1980, and in 1990-1993, in 1999, and the last is in 2008-2009.

II. Theories
Recession is a general slowdown in economic activity over a long period of time, or a business cycle contraction. During recessions, many macroeconomic indicators vary in a similar way. Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation all fall during recessions; bankruptcies and the unemployment rate rises. OPEC (Organization of the Petroleum Exporting Countries) is a cartel of twelve countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular...
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