ECONOMICS OF OIL - PowerPoint PPT Presentation

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ECONOMICS OF OIL

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... Iran 173,625 4 UAE 157,300 5 Iraq 140,300 6 Kuwait 104,000 7 Canada 97,800 8 Russia 80,000 9 Libya 48,014 10 Nigeria ... Want to learn more? www.eia ... – PowerPoint PPT presentation

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Title: ECONOMICS OF OIL


1
ECONOMICS OF OIL
  • March 3, 2015

2
Topics - Economics of Oil
  • Price changes over time / Price formation
  • World supply and demand
  • The U.S. demand and imports
  • World proved reserves / Are we running out?
  • Components of gasoline price at the pump

3
Oil Price Great Price Volatility over Time.
Why?
4
External Econo-Political Shocks and Price
5
The SR Supply and Demand Elasticity
Inelastic S and D - ED gasoline 0.2 (SR)
- Production constraints (SR) The S and D
shifters? Supply War, embargoes, OPEC, natural
disasters, exploration, fracking. Demand The
business cycle, conservation, and
substitutes Expectations, and speculative
Investors.
6
The SR Supply and Demand Elasticity
7
Price changes
  • Changes in supply or demand have large impact to
    price, small impact to quantity
  • Recent changes worldwide
  • Recent changes US

8
Price changes
9
World Oil Supply
10
World Oil Supply
11
The Worlds Top Producer of Oil is also
  • ..the worlds top importer of oil. Why?

12
The World Daily Oil Consumption - by Country
(2014), Barrels per Day
  • 1   United States 19,400,000  
  • 2   China 10,400,000
  • 3   Japan 4,367,000
  • 4   Russia 2,858,000
  • 5   India 2,722,000
  • 6   Germany 2,456,000 
  • 7   Brazil 2,372,000
  • 8   Canada 2,371,000
  • 9   Saudi Arabia 2,311,000
  • 10   Korea, South 2,214,000  

USA in a class of its own!
Total 91,000,000 bbl/day
13
The Volume of U.S. Oil Imports
  • Note From 10M Barrels / Day
  • to 6.6 M Barrels/Day
  • in six years
  • U.S. Daily consumption is 19.4M. Barrels/Day

A decreasing dependence on oil imports
14
The U.S. Crude Oil Imports- by Country (thousand
barrels per day)
  • 2009 2012
  • 1. CANADA 1,956 1,938
  • 2. MEXICO 1,187 1,096
  • 3. SAUDI ARABIA 1,503 989
  • 4. VENEZUELA 1,039 965
  • 5. NIGERIA 922 771
  • 6. ANGOLA 504 449
  • 7. IRAQ 627 448
  • 8. BRAZIL 231 294
  • 9. ALGERIA 312 277
  • 10. COLOMBIA 178 254
  • 11. RUSSIA 116 232
  • 12. KUWAIT 206 185
  • 13. ECUADOR 214 174
  • 14. AZERBAIJAN 73 75
  • 15. CONGO (BR) 67 64

Friends and Foes
The Business Goes On
15
Peak Oil
The Hubbert peak theory for any given
geographical area, the rate of petroleum
production tends to follow a bell-shaped
curve. Early (pre-peak), the production rate
increases because the discovery rate and
infrastructure. Later (post-peak), production
declines because of resource depletion.
16
Have We Reached the Peak Yet?
17
World Reserves
Will the world run out of oil in the next few
decades? No, for two reasons
Rank Country Reserves (MMbbl)
1  Venezuela  298,350
2  Saudi Arabia  268,350
3  Iran  173,625
4  UAE  157,300
5  Iraq  140,300
6  Kuwait  104,000
7  Canada  97,800
8  Russia  80,000
9  Libya  48,014
10  Nigeria  37,200
11  United States  30,529
TOTAL WORLD 1,481,526
Reserves / Daily use _______
18
The Price of Gas at the Pump
  • 2010 2015

The ones who make the big money are
19
  • Have an Oily Day!
  • Want to learn more?
  • www.eia.doe.gov
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