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|competition=December 2014
|competition=December 2014
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The price of oil has changed greatly over time. This means that price is very volatile and can’t be subject to monopoly. The ever changing prices is then attributed to majorly market forces of demand and supply. This article explains and shows how the demand and supply affects the oil price and also elucidates on the global issues affecting the demand of oil, and also explains the supply discrepancies of the oil resource.
The general oil price has changed greatly over time. This means that price is very volatile and can’t be subject to monopoly. The ever changing prices is then attributed to majorly market forces of demand and supply. This article explains and shows how the demand and supply affects the oil price and also elucidates on the global issues affecting the demand of oil, and also explains the supply discrepancies of the oil resource.
The world is a diverse place and its dynamic nature varies greatly with the ticking clock. This implies that classical economic principles that explain demand and supply are being constrained and become greatly limited in explaining the exorbitant issues affecting demand and supply of the oil resource at a global scale.
The world is a diverse place and its dynamic nature varies greatly with the ticking clock. This implies that classical economic principles that explain demand and supply are being constrained and become greatly limited in explaining the exorbitant issues affecting demand and supply of the oil resource at a global scale.
[[File:Economics_Fig-1.png|thumb|300px|{{figure number|1}}Crude oil prices trend since 1861]]
[[File:Economics_Fig-1.png|thumb|300px|{{figure number|1}}Crude oil prices trend since 1861]]
This supply strain is because just like land the oil resource is in fixed supply that means that at any time, there is only a limited amount that can be done readily available under the current technological conditions. Another reason to justify this general decline in prices is the improvement of technology levels for the other energy sources for instance bio energy and solar energy. This has to a minor extent also provided a substitution to the oil resource. To further justify the decline in prices, the cost of production has greatly increased over the past decade due to the fact that the conventional reserves that are easy to produce from are not in existence anymore and companies are going in for very unconventional reserves which are highly capital intensive with a high risk base just like the kashagan field in Kazakhstan.
This supply strain is because just like land the [[oil as an energy source|oil resource]] is in fixed supply that means that at any time, there is only a limited amount that can be done readily available under the current technological conditions. Another reason to justify this general decline in prices is the improvement of technology levels for the other energy sources for instance bio energy and solar energy. This has to a minor extent also provided a substitution to the oil resource. To further justify the decline in prices, the cost of production has greatly increased over the past decade due to the fact that the conventional reserves that are easy to produce from are not in existence anymore and companies are going in for very unconventional reserves which are highly capital intensive with a high risk base just like the kashagan field in Kazakhstan.
The oil and gas business is cartel led by the organisation of petroleum exporting countries (O.P.E.C), this cartel has periodic production restrictions in which they dictate how much the countries that adhere to the OPEC can produce. These restrictions can be basing on various factors such as economic climate. The restrictions will cause market deficiencies and affect the price of the oil.
The oil and gas business is cartel led by the organisation of petroleum exporting countries (O.P.E.C), this cartel has periodic production restrictions in which they dictate how much the countries that adhere to the OPEC can produce. These restrictions can be basing on various factors such as economic climate. The restrictions will cause market deficiencies and affect the price of the oil.