Factors Affecting The International Oil Prices Economics Essay

August 23, 2017 Economics

Introduction

In this paper, the research worker will do a treatment about the oil monetary value in 2009 and do an analysis of the grounds and the factors impacting the international oil monetary values, such as the uncertainness in the sum of oil resources and recoverable militias, external forces intervene in the universe oil market, the varied commanding ends of oil resources, and authorities intercession on the oil market. Then the research worker will do an analysis of market construction with strategic confederation in the oil industry. And this sort of market construction can do a good affect the oil scheme and pricing policy for fuel.

The volatility of oil monetary values in international trade is one of the most dramatic scenes. In the World, there is still no trade good like oil which can increase and diminish drastically in such a short clip. In the undermentioned tabular array, the ordinate informations presents the hebdomadal all states spot monetary value FOB weighted by estimated export volume ( Dollars per Barrel ) . From the tabular array, the research worker can happen out that in 2009, the oil monetary value of the universe is increasing while in fluctuation in local countries. And the research worker will do an analysis of the factors impacting the international oil monetary values ( Migdalas, Baurakis, Kalogeras & A ; Meriem, 2004 ) .

Dollars per Barrel

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

First, there is uncertainness in the sum of oil resources and recoverable militias. Presently, under the status of scientific discipline and engineering, people ‘s apprehension of the oil resources is still limited. When economic experts predict oil monetary values, the sum of oil resources is one of the of import parametric quantities. If the economic sciences take advantage of the over-estimated informations, so the future oil monetary value may be lower than the existent degree of oil monetary value. In add-on, the sum of oil recoverable militias is besides in direct relationship with production costs and oil monetary value, so its alteration will do matching alteration in oil monetary values. Therefore, the sum of oil resources and recoverable militias are the of import grounds for oil monetary value volatility. Second, external forces intervene in the universe oil market so that the precedence excavation order theory has been destroyed. Since there are many external forces interfere with the universe oil market, the universe oil market is really imperfect and non in free competition. In fact, the ground that the precedence excavation order theory has been destroyed is the universe ‘s political demands. Since energy security is one of the most of import parts in the national security, many authoritiess try their best to do acquiring stable oil beginnings as their aims of of import policies. Third, the commanding ends of oil resources have varied and made the international markets behaviours change. At present, in most instances, the oil development and monetary value determination are frequently made by the universe ‘s major oil-producing authorities or major oil-importing and at last depend on the balance of the joint extent and their monopoly power. Fourth, authorities intercession on the oil market. Because of the specialness of oil production, about all the national authoritiess will do and implement some kind of intercession policies. No affair oil-exporting states or oil-importing states, they both need to command the oil monetary value through forming assorted signifiers of steps. In add-on, some states will besides do administrative intercession on oil monetary value and minutess behaviours ( Migdalas, Baurakis, Kalogeras & A ; Meriem, 2004 ) .

What sort of market construction applies to the oil industry?

For the oil industry, doing strategic confederation is good for recognizing effectual market construction. Strategic confederations can be considered as that in order to accomplish their common strategic ends two or more endeavors take some joint actions, such as common cooperation, sharing of hazards and sharing of benefits. Harmonizing to the theory of value concatenation, the procedure that companies create value can be decomposed into a series of different, distinguishable but interconnected activities which can represent the concern of value concatenation. The amount of value in some industry can organize value system and the running quality of one subdivision can do a direct consequence on the costs and benefits of other subdivisions. Some research workers have considered that the company ‘s competitory advantage comes from the value concatenation itself and the associations. However, endeavors can hold the same comparative advantage in all the facets of the value concatenation. For illustration, in some subdivisions, the company have its first-class advantages while in other subdivisions, other companies may have their advantages. So in order to accomplish double- win, they can collaborate at some critical success factors in order to finish their intents which can non be achieved by their ain power. So in the long clip, through be aftering the future competitory environment and set uping strategic confederations, the companies and organisations can better their operating environmental and operational conditions from the point of scheme, make active usage of the external economic system and achieve the complement. When the companies and organisations can non do to the full usage of the bing internal strengths, including accrued experience, engineering and endowment in their several advantages Fieldss, or deficiency of resources, they can do full usage of idle resources by strategic confederation in order to complement the lack and avoid the waste of resources. So this sort of market construction non merely can increase the efficiency of advantage resources, cut down costs, but besides can salvage the input in the advantage resources, cut down the transpose cost and eventually better the flexibleness of seting concern scheme ( Mili & A ; Zuniga, 2001 ) .

How the market construction affect the oil scheme and pricing policy for fuel

First, strategic confederation can assist recognize effectual competition. Some research workers, such as Marshall, have found out the struggle of prosecuting scale economic system and maintaining competitory moral force. Large-scale production can convey about scale economic system for the endeavor, enabling the costs of the merchandises to worsen, increase the market portions and eventually take to the turning monopoly. However, when the monopoly signifiers, this will necessarily go a hinder that will do economic system loss verve ( Migdalas, Baurakis, Kalogeras & A ; Meriem, 2004 ) .

Through the constitution of strategic confederations, this sort of struggle state of affairs can be alleviated in a big extent ( Piotrowski, 2005 ) . It non merely can run into the demands of accomplishing scale economic systems, but besides can keep strong competition. Strategic confederations can accomplish its scale economic system through cooperation and get down a higher degree of competition in order to recognize the coexisting of scale economic system and competition. For illustration, in the oil industry, the two sides in the upper degree cooperate do non do any consequence on the competition in the lower degree ; in add-on, this alliance constituted by the two sides besides can vie with other companies outside the alliance ( Martinez, Aragones & A ; Poole, 2002 ) .

Second, constructing strategic confederations can assist cut down the hazards. The oil industry is in high hazard. Specifically talking, it can stand for in the undermentioned facets: 1 ) geological hazard. In general, for an oil geographic expedition plan, the chance of non-oil and gas find is great. So this means that oil companies have to bear a immense qualitative hazard. 2 ) proficient hazard. The oil industry is a technology-intensive industry and the production procedure involves a broad country of scientific disciplines and engineerings. 3 ) operational hazards. For many times, there is a big investing in geographic expedition and development. So if the company can non run good, it will endure a great loss. 4 ) political hazard ( Piotrowski, 2005 ) . If the authorities alterations or legislative alterations, it will do investing losingss of the oil company. So in this state of affairs, constructing strategic confederations has more of import significances. They can do usage of joint venture and other company ‘s financess, advanced engineering and direction experience in order to develop fringy oil Fieldss and new undertakings. This is an effectual attack to avoid hazards ( Kotler, Jain & A ; Maesincee, 2002 ) .

Third, strategic confederations can assist keep the flexibleness and independency of each group and it is helpful in animating and encouraging competition. Strategic confederations are based on the common business of the market and do co-developing engineerings as the basic ends. In this manner, strategic confederation itself is a dynamic and unfastened system with great flexibleness. At the same, alliance parties have greater independency. Besides joint ventures, the companies in other signifiers all have the equal and independent position and they can run harmonizing to their ain development demands.

In all, the successful experience of strategic confederations has shown that strategic confederations non merely can assist do the oil companies get rid of the deficit in the financess, deficiency of proficient militias, turning troubles and hazards in environmental and political, but besides provides a cutoff to concern success.

Decision

In this paper, the research worker made a treatment about the oil monetary value in 2009 and made an analysis of the grounds and the factors impacting the international oil monetary values. Then the research worker provided the market construction with strategic confederation in the oil industry. And this sort of market construction can do a good affect the oil scheme and pricing policy for fuel. The successful experience of strategic confederations has shown that strategic confederations non merely can assist do the oil companies get rid of the deficit in the financess, deficiency of proficient militias, turning troubles and hazards in environmental and political, but besides provides a cutoff to concern success.

x

Hi!
I'm Amanda

Would you like to get a custom essay? How about receiving a customized one?

Check it out