Zebin Dholasaniya

ISM- Period 7
George, Patrick E. "How the Crude Oil Market Works." HowStuffWorks. N.p., 05 Oct. 2009.
Web. 19 Feb. 2015. <http://science.howstuffworks.com/environmental/energy/crude-oilmarket.htm>.

Crude oil is petroleum composed of carbon, hydrogen, sulfur, and animal and plant
remains
Refined crude oil is gasoline, kerosene, diesel fuel, and other products
There are 42 gallons of oil in a barrel
- 1 gallon can be converted to .47 and .68 gallons of gasoline
Price determinants for gasoline
- Supply and Demand: High supply, low demand, low prices. Low supply, high
demand, high prices
- Oil Speculation: Placing bets on how much oil prices will increase or decrease
in the future in the financial market
o
Example: Spectators who buys oil futures at higher price than the
current market price can cause oil producers to horde their oil supply
so they can sell it later at the higher future price. This means more
money for oil producers.
o
In U.S, the Commodity Futures Trading Commission (CFTC) was
established during the 1970s Oil Crises to reduce speculation that
artificially increased the price of oil
- Government Regulations: Laws aimed at climate changes, taxes
o
Example: Recent rules placed on sulfur content could raise demand for
sweet crude oil a type of oil with less sulfur content
- OPEC (Organization of the Petroleum Exporting Countries): Monitor oil
supply and can distribute oil as they wish, which sways the supply and price
of oil.
o
Example: Gas Crisis" of the 1970s - Middle Eastern members of
OPEC imposed an oil embargo on Western oil exports because of their
support of Israel in the war. The result was a rise in oil prices
- Oil as a non-renewable source: Limited resources, increase focus on using
efficient energy products and converting to renewable resources
Worlds leading oil exporters with massive supplies of oil: Saudi Arabia, Iraq, Iran
Second largest oil producer: North America

This source identifies and explains the factors that determine crude oil and gasoline
prices with economic and historical evidence to support.