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HISTORY
GENERAL
• The presence of oil was first discovered in China in the 3rd century.
• The crude oil was used for the lighting purposes in Ancient Persia.
• In 1889, the presence of oil in India was discovered in Digboi in Assam. First
crude oil refinery in India was set up in Digboi in1901.
• In 1958 and 1974, two more places for crude oil production were identified
namely Cambay onshore basin and Bombay offshore basin.
• The largest crude oil producing oilfield is the Mumbai high field that produces
around 260000 barrels per day.
GENERAL
Price
Price
Demand Demand Demand
Oil Supply and Demand The Oil shocks Ever Increasing Demand
Both demand and supply Drastic reduction in supply. Rise of emerging markets.
are highly inelastic. Rapid rise in price. Increase in demand for oil
Small changes to supply or Oil shocks of 1970s , oil in China and India.
demand curve cause large shocks of gulf war.
changes to the price.
• The country has much depended on coal to satisfy its energy needs in the
earlier times but the use of crude oil and gas is taking over the dominance
of coal with the change in time.
• India has around 5.4 billion barrels of oil reserves with it.
• The domestic production has increased in the recent past to reach the 0.8
million barrels per day mark.
• The countries from which India imports crude oil are Venezuela,
Nigeria, Sudan, Iran, Kuwait.
Russia produces about 240% more oil In contrast, India consumes two-thirds
than it more oil
consumes. than its produces.
Mexico’s oil production was 39% America consumes a third more than
greater than domestic
domestic consumption oil production.
Canada output 35% more oil than it Although rich in natural resources,
used. Brazil’s oil
10
China generated about 16% more oil consumption outpaces its fuel
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12
OIL PRICE VOLATILITY
OPEC output
Attacks in Mexico
Tensions in Turkey , Iran
USD depreciation
Strong
demand
Recessio
n
13
IMPACT OF OIL PRICES ON GLOBAL ECONOMY
Impact variables :
1. Import dependency
2. Oil Intensity
Inflation increases.
Investment decreases.
15
WHY PRIVATE PLAYERS SHUT DOWN THEIR RETAIL PUMPS ???
Indian fuel reform freeing retailers to set petrol prices and lifting prices
of other products.
In the short term, it will definitely hit the pockets of the people as the
petrol prices surged by approximately 10%.
This reform will help the private sector oil companies like Reliance and
Essar which had almost 15 percent of the retail fuel market five years ago,
before subsidised state firms nearly squeezed them out.
Due to this reform, Reliance plans to reopen all of its fuel stations in the
country and will sell petrol and diesel at the same rates as state firms.
The government plans to free diesel prices also, but the deputy
chairman of the Planning Commission said in an interview the government
would set diesel rates for the next few months.
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FUTURE TRENDS IN OIL PRICES