he Cause and Effect of Oil Price Hike to the Price of Commodities that Affect the Firms and Consumers
The Cause and Effect of Oil Price Hike to the Price of Commodities that Affect the Firms and Consumers
Introduction
Oil is very important as it one of major sources of energy. With oil there is fuel that is made to run or vehicles, buses, airplanes, to run machineries and plants and to heat hour homes. We have this unlimited need for oil but like any other natural resources, it is limited. One day in the future it is possible that we'll run out of oil. So as ordinary consumers we just accept and go with the flow as price of oil and other oil products increase up to the extent that we can no longer afford them. Ordinary people are the one greatly affected by this oil price hike that has a domino effect on everything we see.
Data Analysis
Why are we experiencing oil price hike every now and then? Here are some possible reasons or causes of this event. The rise in the price of oil can be determined by several contributing factors. The simplest explanation is that the demand for oil is greater than the current supply. When demand exceeds supply, price will increase as people are willing to pay more. Depending on your political views and knowledge of the situation, you may also believe that the production of oil is much lower than capacity because certain middle-eastern countries know that America depends on oil imports more than other countries. An increase in oil prices will lead to a slightly weaker US economy. The other reason is that OPEC ( Organization of Petroleum Exporting Countries ) is a large cartel arrangement that has the sole purpose of profit maximization as a whole. Thus they set the industry to maximize profits for the industry as a whole as opposed to competing amongst each other - this allows OPEC to effectively limit the output so that it corresponds to the profit maximizing level and drive up the price. Oil producing countries are having a hard time transporting the oil or bought by people even before the new batch arrives. These are just few
Introduction
Oil is very important as it one of major sources of energy. With oil there is fuel that is made to run or vehicles, buses, airplanes, to run machineries and plants and to heat hour homes. We have this unlimited need for oil but like any other natural resources, it is limited. One day in the future it is possible that we'll run out of oil. So as ordinary consumers we just accept and go with the flow as price of oil and other oil products increase up to the extent that we can no longer afford them. Ordinary people are the one greatly affected by this oil price hike that has a domino effect on everything we see.
Data Analysis
Why are we experiencing oil price hike every now and then? Here are some possible reasons or causes of this event. The rise in the price of oil can be determined by several contributing factors. The simplest explanation is that the demand for oil is greater than the current supply. When demand exceeds supply, price will increase as people are willing to pay more. Depending on your political views and knowledge of the situation, you may also believe that the production of oil is much lower than capacity because certain middle-eastern countries know that America depends on oil imports more than other countries. An increase in oil prices will lead to a slightly weaker US economy. The other reason is that OPEC ( Organization of Petroleum Exporting Countries ) is a large cartel arrangement that has the sole purpose of profit maximization as a whole. Thus they set the industry to maximize profits for the industry as a whole as opposed to competing amongst each other - this allows OPEC to effectively limit the output so that it corresponds to the profit maximizing level and drive up the price. Oil producing countries are having a hard time transporting the oil or bought by people even before the new batch arrives. These are just few