Economics Case Studies, Economic Crisis Case Studies

 

Code :ECC0060 Year : 2020 Industry :-			Region : India Teaching Note:Available Structured Assignment : Not Available
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THE IMPACT OF PRICE ON OIL DEMAND: Demand for crude oil had a history of random movements. The forces for the random movements of crude oil demand were many. The demand for crude oil products, especially gasoline, rose sharply after World War II in the West due to a fall in prices and to people moving to the suburbs. However, supply restrictions, wars among producers, and political revolutions in the 1970s reduced the supply of oil, leading to a rise in oil prices during 1973 to 1979. In the years that followed, a combination of energy conservation, smaller cars, the growth of the information economy, and expanded production around the world led to falling oil prices. After 2002, there was turmoil in oil markets due to the war in Iraq and growing world demand for petroleum .	Case Studies on Best Practices - Vol. I	Case Studies on Aviation Industry
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NON-PRICE FACTORS INFLUENCING OIL DEMAND:

Other than the price, the factors that influenced the quantity of consumption of oil included income levels with the changing economic conditions. An increase in GDP (Refer to Figure IV) led to an increase in the demand for cars (Refer to Figure V). Infrastructure growth (Refer to Exhibit II) and increasing demand from the construction, logistics, e-commerce, and consumer goods sectors, also contributed to the growth in the demand for oil..

THE ROAD AHEAD:

The future demand for oil would depend on the availability of substitutes at affordable prices, and the increasing standard of living, mostly in rural areas. The number of patents filed in fossil fuel had been growing at an accelerating pace since 1990. As of December 31, 2013, there were 2,933 patents – thirteen times as many as in 1990 . However, if the substitutes for crude oil were not cost-effective, could crude oil become a Giffen good? What would be the effect on the oil industry and on the global market, if gasoline became a Giffen good?...

 

EXHIBITS: Exhibit I: Trend in Oil Price Growth and Consumption

Exhibit II:Growth in Infrastructure

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