Oil Prices


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Oil Prices

  1. 1. How Oil Was Made? The first theory suggests that oil is a fossil fuel Some scientists believe in another theory. Twentieth- century Russian scientists proposed the "abiotic" theory.
  2. 2. Where is Oil Found? Saudi Arabia The Canada is the second largest (proven oil reserves) . Other countries like Iraq, Iran, Kuwait and the United Arab Emirates and USA.Other nations with large reservoirs of oil include: Libya Venezuela Nigeria Mexico Indonesia the EU nations Brazil China
  3. 3. OPEC Algeria  Libya Angola  Nigeria Ecuador  Qatar Iran  Saudi Arabia Iraq  United Arab Emirate Kuwait  Venezuela
  4. 4. Types of Oil Very Light Oils or Light DistillatesThis oil type includes: Jet Fuel, Gasoline, Kerosene, Light Virgin Naphtha,Heavy Virgin Naphtha, Petroleum Ether, Petroleum Spirit, and PetroleumNaphtha. Light Oils or Middle DistillatesThis oil type includes: Fuel Oil (grades 1 and 2), Diesel Fuel Oils (grades 1and 2), Domestic Fuel, and Marine Gas Oil - Light Crude falls into thiscategory. Medium Oils - Most Crude Oil falls into this categoryThis type of oil MAY causes long term, severe damage to fish, waterfowl,fur bearing animals and intertidal organisms. About 1/3 of medium oilsevaporate within 24 hours. Heavy Fuel OilsThis category includes heavy crude oil, Fuel Oil No. 3 & 4), Fuel Oil No. 5(Bunker B), Fuel Oil No. 6 ( Bunker C), Marine Intermediate Fuel, andMarine Heavy Fuel.
  5. 5. Three Influencing Factors of International Oil Price The changing 1 supply-demand structure dominates oil price Oil Price 2 3
  6. 6. Old seven sisters
  7. 7. New seven sisters
  8. 8. What is Crude Oil? Crude oil is a naturally-occurring substance found in certain rock formations in the earth. It is a dark, sticky liquid classified as a hydrocarbon. This means, it is a compound containing mainly carbon and hydrogen. Crude oil is highly inflammable and can be burned to create energy. Petroleum= Petra (Rock) + Oleum (Oil)
  9. 9. Crude Oil Production India Thousand Barrels DailyKuwait UAEMexicoCanada China Iran US Saudi…Russia 0 5000 10000 15000 Source: BP Statistical Review of World Energy 2011
  10. 10. Crude Oil ConsumptionRussia Thousand Barrels Daily IndiaJapanChina US 0 5000 10000 15000 20000 25000
  11. 11. India’s Oil Import 11% 34% 18% 5% 10% 22%Iran Saudi ArabiaOther Western HemisphereAfrica Other Middle East Source: Global Trade Atlas
  12. 12. Consumption of Major Petroleum Products 9% 8% 40% 36% 7%LPG Kerosene Diesel Petrol All other products Source: Ministry of Petroleum Basic Statics
  13. 13. Crude Oil PriceSource:- Energy Information Administration and Bureau of Labor Statistics 2012
  14. 14. Who Uses Oil? The U.S. uses 25% of the estimated 80 million barrels of oil produced around the world every day. The country that exports the most oil to America is Canada, with Saudi Arabia second. The European Union (EU) also uses a large percentage of the worlds reserves. China currently ranks as the third-biggest oil consumer on the planet.
  15. 15. Break up of cost calculated by the government.• Basic Price: Rs 28.93• Excise duty: Rs 14.35• Education Tax: Rs 0.43• Dealer commission: Rs 1.05• VAT: Rs 5.5• Crude Oil Custom duty: Rs 1.1• Petrol Custom: Rs 1.54• Transportation Charge: Rs 6.00• Total price: Rs 58.90
  16. 16. India: Macroeconomic impacts of oil price rise No decline in consumption of crude and petroleum products. Increase in trade deficit. No effect on public spending on physical infrastructure and social sectors . Increase in public spending on renewable energy development. Electricity pricing unlikely to be impacted. Natural gas prices increased 12% for the power and fertilizer sectors, and 136% for other industrial consumers. No increase in prices for small-scale industries and transport sectors.
  17. 17. India: Sectoral impacts of oil price rise Petroleum sector Transport sector Fertilizer sector
  18. 18. India: Microeconomic and poverty impacts of oil price rise — community-wide impacts Income patterns Expenditure patterns Impact on major economic activity (agriculture)
  19. 19. India: Microeconomic and poverty impacts of oil price rise — direct impacts on households Changes in energy expenditure Changes in energy consumption Transportation costs
  20. 20. To summarize the studyWhen Oil prices Moves UP :1. Inflation increases2. Govt. spending on subsidy increases3. Foreign currency reserves reduce4. Our export becomes weaker5. GDP is affected negatively6. Share market crumbles7. Investment decreases