The Market For Oil And Gasoline

The Market for Oil and Gasoline

Question 1:

OPEC stands for the Organization of the Petroleum Exporting Countries. OPEC's eleven member countries include Venezuela, Algeria, Libya, Nigeria, Saudi Arabia, The United Arab Emirates, Qatar, Kuwait, Iraq, Iran, and Indonesia. In the fourth quarter of 2003 OPEC will produce 30.5 million barrels per day of the worlds projected total of 79.9 million barrels per day giving OPEC thirty-eight percent of the world's total production. The United States will produce 9 million barrels per day in the fourth quarter of 2003, which is 11 percent of total global production. In addition to OPEC and the United States many other countries produce oil. Canada and Mexico are the other major producers in North America, producing 4 and 4.5 percent of the global totals, respectively. The North Sea is the lone major producer in Europe contributing 8 percent to the global total. Asia's major non-OPEC producers are China, producing 4 percent of the global total, and the countries of the former Soviet Union which produce 13 percent of the global total. Oil fuels our cars, heats our homes, cooks our foods, is used in generating electricity, and is a key component in making plastics.

Looking at a graph of the United State's oil supply you see some shocking results. Since 1970 the oil being produced per day in the United States has generally fallen. In 1984 and 1985, the nation saw hope with increasing oil production. Other than those few years the yearly average has progressively gotten smaller per day since 1970. The graph's line is negatively sloped as the average in 1970 was near 12,000 (in thousands of barrels per day) and the projected average in 2002 being around 9,000. When plotting the points of OPEC's oil supply since 1970, the graph is much different from the United States graph. The line is more of a rollercoaster as it goes up and down pretty much throughout all the years. From about 1985 until 2001 the slope of the line is positively sloped and OPEC's oil supply has been increasing. OPEC is even producing more oil today than they were back in 1970. Their 1970 average was 23,567 (in thousands of barrels per day) and their projected value for 2002 was 28,705. The world's oil supply is also different from the United State's supply as well as OPEC's. Since 1970 there has been a pretty steady rise in oil production. From 1980 to about 1985 there was a small dip in average oil being produced but since then there has been on average more oil produced every day. The total supply went from 48,986 (in thousands of barrels per day) to the projected value in 2002 being 76,330. OPEC's percentage of total world oil production along with the United States' percentage of total world oil production has decreased. OPEC went from in 1970 having 48.1 % of the worlds total oil production to having just 23.8 % in the projected value for 2002. The United States had 37.6 % of the world's total oil production in 1970 and just 11.8 % as the projected value for 2002.

Due to technological advancements and a lucrative government, the US uses much more oil than the average country. From 1970 to 2002, the US alone constituted of about 23 percent of annual world oil demand. The US oil demand, however has not dramatically increased from 1970 to 2002 - it has mostly remained at about 17,283 barrels per day. It shows a very slight increasing trend, which may suggest that the US is using fuel more efficiently, possibly from inventions or substitutes, today since the population in the US has increased since 1970. The world total demand for oil has increased since 1970. Although the data definitely suggests a positive curve, the slope is not as dramatic as one might expect, considering increasing world population and overall increasing demand and supply of equipment and machinery. Between 1970 and 2002, the world oil demand averages at about 64,210 barrels per day. Thus, although US is a major contributor to the world total oil demand, the demand for oil has increased at a reasonable rate considering increasing population, and increasing demand and supply of oil burning equipment.

Comparing the United States' oil demand and supply reveals many things. The U.S. oil supply has been steadily decreasing. On the other hand, U.S. oil demand has been slowly rising. This indirect relationship points to shortages that may occur within the U.S. With the exception of 1980 - 1985, U.S. wellhead and refiners' prices have been under 20 dollars per gallon since 1978. As of 2000, though, prices have been on the rise. This would explain the shortages that are taking place.

Question 2:

Looking at a graph of the United State's oil supply you see some shocking results. Since 1970 the oil being produced per day in the United States has generally fallen. In 1984 and 1985, the nation saw hope with increasing oil production. Other than those few years the yearly average has progressively gotten smaller per day since 1970. The graph's line is negatively sloped as the average in 1970 was near 12,000 (in thousands of barrels per day) and the projected average in 2002 being around 9,000. When plotting the points of OPEC's oil supply since 1970, the graph is much different from the United States graph. The line is more of a rollercoaster as it goes up and down pretty much throughout all the years. From about 1985 until 2001 the slope of the line is positively sloped and OPEC's oil supply has been increasing. OPEC is even producing more oil today than they were back in 1970. Their 1970 average was 23,567 (in thousands of barrels per day) and their projected value for 2002 was 28,705. The world's oil supply is also different from the United State's supply as well as OPEC's. Since 1970 there has been a pretty steady rise in oil production. From 1980 to about 1985 there was a small dip in average oil being produced but since then there has been on average more oil produced every day. The total supply went from 48,986 (in thousands of barrels per day) to the projected value in 2002 being 76,330. OPEC's percentage of total world oil production along with the United States' percentage of total world oil production has decreased. OPEC went from in 1970 having 48.1 % of the worlds total oil production to having just 23.8 % in the projected value for 2002. The United States had 37.6 % of the world's total oil production in 1970 and just 11.8 % as the projected value for 2002 (International).