U.S. Booming Oil Industry
Macroeconomics
5/27/13
U.S.’s Booming Oil Industry
Many living in the U.S. have been wondering why gas prices remain so high in the United States. The U.S. led war in the middle-east is winding down, people are driving more fuel efficient cars, and our own country is producing more oil than ever before. What could possibly keep gas prices so high?
The U.S. has become a top oil exporter, especially for Canada and Mexico; who is consuming a lot more fuel than in the past. Although the United States is on the right path for becoming oil independent and is enjoying increased production, it has the ability to negatively affect our country’s economy at the same time. Decreasing unemployment rates has been a main focus for the last few years and big businesses that rely on massive amounts of oil are having a hard time hiring more employees because their production costs remain so high. Oil companies are certainly being greedy with their extremely profitable business and the rest of America is feeling the negative impact.
The U.S. runs a market system style economy also known as capitalism. This means individuals and businesses make their own economic decisions and set out to achieve their goals. In this case the U.S. oil companies price the oil they produce based off the nation’s aggregate demand. The United States’ and especially the foreign nations’ aggregate demand is respectively high at this time and oil companies are taking advantage of their market system economy in which they belong to. However this country is not a pure capitalistic country meaning government has little say with the market pricing of oil. It seems like the oil companies tend to keep prices just high enough; to maximize their profits while not overly creating a negative impact on America’s economy. The U.S. government has limited ability to influence the oil companies pricing and works to keep gas prices bearable for most businesses and individuals. In this modern day scenario,
5/27/13
U.S.’s Booming Oil Industry
Many living in the U.S. have been wondering why gas prices remain so high in the United States. The U.S. led war in the middle-east is winding down, people are driving more fuel efficient cars, and our own country is producing more oil than ever before. What could possibly keep gas prices so high?
The U.S. has become a top oil exporter, especially for Canada and Mexico; who is consuming a lot more fuel than in the past. Although the United States is on the right path for becoming oil independent and is enjoying increased production, it has the ability to negatively affect our country’s economy at the same time. Decreasing unemployment rates has been a main focus for the last few years and big businesses that rely on massive amounts of oil are having a hard time hiring more employees because their production costs remain so high. Oil companies are certainly being greedy with their extremely profitable business and the rest of America is feeling the negative impact.
The U.S. runs a market system style economy also known as capitalism. This means individuals and businesses make their own economic decisions and set out to achieve their goals. In this case the U.S. oil companies price the oil they produce based off the nation’s aggregate demand. The United States’ and especially the foreign nations’ aggregate demand is respectively high at this time and oil companies are taking advantage of their market system economy in which they belong to. However this country is not a pure capitalistic country meaning government has little say with the market pricing of oil. It seems like the oil companies tend to keep prices just high enough; to maximize their profits while not overly creating a negative impact on America’s economy. The U.S. government has limited ability to influence the oil companies pricing and works to keep gas prices bearable for most businesses and individuals. In this modern day scenario,