DECREAMENT IN OIL

PRICEGroup member

1.Purnendra Shrivastava 14202118

2.Divya Shree Bharti 14202100

3.Debarati Bhattacharya 14202108

4.Sukhbir singh 14202085

5.Anurag oliver 14202077

6.Ankita singh 14202093

CONTENT

INTRODUCTION

IMPORTENCY OF OIL IN OUR DAILY LIFE

CAUSE OF OIL PRICE VARIATION

CAUSE AND EFFECT OF OIL PRICE VARIATION IN HUMAN LIFE

EFFECTS OF OIL PRICE DECREASING

CONTRIBUTION OF INDIA AND OTHER COUNTRIES ON OIL PRICE REDUCTION

FEW FACTS AND FIGURES

CONCLUSIONS

INTRODUCTION

1) With each passing year, oil seems to play an even greater role in the global economy. In the

early days, finding oil during a drill was considered somewhat of a nuisance as the intended

treasures were normally water or salt.

2) 1857 that the first commercial oil well was drilled in Romania. The U.S. petroleum industry

was born two years later with an intentional drilling.

While much of the early demand for oil was for kerosene and oil lamps, it wasn't until 1901 that

the first commercial well capable of mass production was drilled at a site known as Spindle top

in south-eastern Texas.

This site produced more than 10,000 barrels of oil per day, more than all the other oil-producing

wells in the U.S. combined. Many would argue that the modern oil era was born that day in

1901, as oil was soon to replace coal as the world's primary fuel source.

Oil's use in fuels continues to be the primary factor in making it a high-demand commodity

around the globe

CONTINU…….

The two primary factors that impact the price of oil are:

supply and demand

market sentiment

The concept of supply and demand is fairly straightforward. As demand increases (or supply decreases) the price

should go up. As demand decreases (or supply increases) the price should go down.

Price Cycle

Additionally, from a historical perspective, there appears to be a possible 29-year cycle that governs the behaviour of

commodity prices in general. Since the beginning of oil's rise as a high-demand commodity in the early 1900s.

IMPORTENCY IN OUR DAILY LIFE

Oil is the key ingredient for global energy needs and will continue to power worldwide

industrial and commercial expansion.

It is also used in a wide variety ways such as cooking, heating, waterproofing and in

numerous consumer products including skin treatments.

It has proven to be a versatile commodity and exceedingly integral to our way of life,

bordering on an absolute necessity.

Oil and gas are used widely in modern life.

Oil fuels the cars, trucks and planes that underpin modern economies and lifestyles.

By-products from oil refining are used in the production of plastics and chemicals, as well as

many lubricants, waxes, tars and asphalts. Nearly all pesticides and many fertilisers are made from

oil or oil by products.

Gas provides electricity and is also used for cooking, heating houses and buildings, and

heating water.

It is also important for fuelling many industrial operations, including glass and steel

foundries, aluminium or nickel smelters, and many manufacturing industries. Gas is used in

producing fertilisers and a wide range of industrial products, including plastics and

polymers, textiles and paints and dyes.

It can also be used in the form of compressed natural gas (CNG) or liquefied natural gas

(LNG) as a transportation fuel.

Continue….

CAUSE OF OIL PRISE VARIATION

Crude oil is one of the most basic global commodities . Fluctuation in the crude oil prices has both direct

and indirect impact on the global economy .

Crude oil prices have gone up to record levels of USD 125 per bbl (rise of around 70 percent from previous

year's levels).

The price variation in crude oil impacts the sentiments and hence the volatility in stock markets all over the

world. The rise in crude oil prices is not good for the global economy.

Price rise in crude oil virtually impacts industries and businesses across the board.

Higher crude oil prices mean higher energy prices, which can cause a ripple effect on virtually all business

aspects that are dependent on energy (directly or indirectly).

Higher and volatile food prices and poor rural people

Boosting household food security.

Increasing sustainable and resilient production.

Strengthening the market integration of small farmers.

Improving risk management.

High oil prices don’t go away, except in recession.

Salaries don’t increase to offset rising oil prices.

Spikes in oil prices tend to be associated with recessions.

High oil prices don’t “recycle” well through the economy.

Housing prices are adversely affected by high oil prices.

CAUSE AND EFFECT OF OIL PRICE VARIATION IN HUMAN LIFE

The impact of decline in oil prices doesn’t “go away”.

Government finances are especially affected by fall in oil prices.

Lower oil prices reflect a need to focus a disproportionate share of investment and resource use inside the oil

sector. This makes it increasingly difficult maintain growth within the oil sector, and acts to reduce growth rates

outside the oil sector.

Business profitability is adversely affected by decline in oil prices.

CONTINUE…..

• Impact on oil consumers- Lower oil prices help to reduce the cost of living. Oil related

transport costs will directly fall, leading to lower cost of living and a lower inflation

rate.

• Impact on oil exporters-For oil exporters a falling oil price is bad news. Many oil

exporting countries rely on tax revenue from oil production to fund government

spending.

• Other economic impacts of lower oil prices-Falling oil prices could delay investment

into alternative ‘greener’ forms of energy, such as electric cars

• Falling oil prices could reverse the recent decline in car use, leading to a steady

increase in traffic congestion and environmental costs of petrol use.

• Control inflation as it has a direct effect on inflation.

• Lower oil prices will help in the management of India’s current account deficit(CAD)

• The scope for elimination of diesel subsidy.

Positive impact on India of price fall in oil

Advantage

Disadvantage

Conclusion

Pressure on Oil Economies

The falling price of oil creates varying degrees of financial difficulties for countries that rely

heavily on its export. According to research by Deutsche Bank, the point at which their

national budgets break even varies from about $125 a barrel for Iran to less than $75 for

Kuwait.

Economic growth concerns fuel fears.

Dragging oil demand may continue longer than many economists would like as global

economies struggle to post strong recoveries, and some nations, such as Japan, substitute oil for

natural gas and alternative fuel sources.

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THANK-YOU…….