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$ Black Gold $
Made By :
Jaskaran S. Kohli
Crude Oil is a naturally occurring thick , dark
brown flammable liquid which is derived from Fossil
Crude Oil is also referred as Black Gold as it of
immense economic importance.
It is a non renewable resource ,thus its demand > supply
leading to high price rise.
An international body called OPEC controls the pricing
of oil all throughout the globe.
Oil prices have risen from $18.5 in 1976
to $150 in 2012.
WHAT IS CRUDE OIL ?
Petroleum or Crude Oil is a naturally occurring thick ,
dark brown flammable liquid found in the Upper
Strata of the Earth’s Crust.
It is recovered mostly through oil drilling and is then
refined into a large number of consumer products,
like petrol,kerosene,plastics andpharmaceuticals.
It is a type of Fossil Fuel consisting of a complex
mixture of hydrocarbons.
• Before it can be used crude oil must be refined.
• Hydrocarbons can be separated using distillation, which
produces different fractions (or types) of oil and gas.
WHY BLACK GOLD?
Petroleum products are extracted from Crude
Oil, which is black in colour.
Availability is minimum but demand is more.
Its economic value is immense.
Causes Inflation and affects the pricing of
10,234 10,782 9,760 11.8%
2 Russia 9,876 9,789 9,934 12.0%
8,481 8,514 9,141 11.1%
4 Iran 4,043 4,174 4,177 5.1%
5 China 3,901 3,973 3,996 4.8%
United States 19,497.95 3,099.9 314 22.6
China 7,831.00 1,245.0 1345 2.1
Japan 4,784.85 760.7 127 13.7
India 2,962.00 470.9 1198 0.9
Russia 2,916.00 463.6 140 7.6
FACTORS AFFECTING PRICE RISE
Changes in Supply & Demand.
Global Equity Market.
Movement in Dollar($).
Organization of the Petroleum Exporting
Countries (OPEC) controls the price.
Increase in Tax Rate.
Wars , Recessions and Natural Calamities are
other important factors.
Supply & Demand determine the price of fuel.
If Demand > Supply , prices will rise and vice-versa.
Global Consumption has grown by 1.2 Million Barrels
Oil is a Non-Renewable resource, hence is limited.
Organization of the Petroleum Exporting
Countries (OPEC) is an intergovernmental
organization of twelve oil-producing countries .
It controls and regulates Global Price of crude oil.
Its main objective is to peruse various ways and
measures to stabilize the price of oil in International
Peak oil is the point in time when the
maximum rate of petroleum extraction is
reached, after which the rate of production
is expected to enter terminal decline.
o In 1956, Hubbert predicted that global oil production would peak
around the Year 2000 and trigger an Energy Crisis with power
blackouts and rising costs of energy and fuel .
WHEN OIL PRICES RISE :
Rise in Inflation Rates.
Government spending on Subsidy Increases.
GDP is affected negatively.
Foreign Currency reserves reduce.
Prices of almost everything increases, causing
extreme hardship towards the common man.
Leads to wars, protests and political instability.
Overall consumption of gasoline is down by
2.5% decline in USA GDP due to rising oil
Prices hit a shocking $150 per barrel
leading to rapid inflation.
A $10-a-barrel increase in the price of oil
reduces U.S. GDP growth by 0.5
PRICE IN INDIA
Prices of crude oil have risen by more than 33% in the
past two months.
Indian Rupee has depreciated from Rs. 44 per dollar in
April 2011 to Rs.49 now.
o Inflation also went up
to 12.27% which was
highest for India in 2
o India’s subsidy zoomed
to 2.5%of GDP.
EFFECT ON INDIAN ECONOMY
Hike in Interest Rates.
Slowdown in Economic Growth.
Fall in Employment Opportunities.
Reduced amount for infrastructure.
Inflation : went up to 12.27%.
Fuel Subsidy Burden : of Rs. 1,42,203 Crores
Rise in Cost of Imports : have risen by $1.2 Billion.
Widening of Trade Deficit :for 2009-10 was $117.3
Estimated that a sustained 10 dollar increase in oil
prices lead to a 1.5 per cent reduction in the GDP.
Extinction of whales.
Extraction of Oil leads to land degradation.
Global Warming: petroleum releases carbon dioxide,
a greenhouse gas.
Oil Spills: damages land, pollutes water and kills
Tar balls: huge blob of oil causing contamination and
Crude oil and refined fuel spills from tanker ship and
damage natural ecosystems.
Can be on land or sea.
Quantity of oil spilled during accidents has ranged from
a few hundred tons to several hundred thousand tons.
Pollutes sea water.
Kills Marine life.
Illnesses and Diseases.
Alternatives to petroleum-based vehicle fuels:
Alternatives to burning petroleum: