Download 3.Oil Crisis

• 1973 oil crisis:
Yom Kippur War
• 1979 oil crisis:
Iranian Revolution
• 1990 oil crisis:
Gulf War
•3 times of oil crisis also makes
the oil prices raise dramatically.
•USA, Japan, got hyper-inflation.
•Finally, the global economic is
turn into recession.
•In 1973 organization of Petroleum
Exporting Countries (OPEC) do not
allow these countries to export oil.
•USA inflation is over 6% and the
followings year is over 10%.
•Global economic crust and
industrial production is stop.
•At 1978 Islamic Revolution was
happened.
•Inflation rate of USA is over 10%.
•Next year, the inflation rate is over
13%.
•Global economic is turn into hyperinflation.
•Unemployment rate is mount up.
•In 1990, Gulf war caused the 3 times of oil
crisis.
•After the Gulf war, the oil price reduces to the
original price.
•Federal Reserve Bank of America takes some
measures, e.g. Reduce the interest rate.
•Recent year, the oil price is increase to near
US$68 which is thrice as before.
•Maybe the forth times of oil crisis and inflation
is coming.
•Cause inflation.
•Purchasing power is becomes lower.
•2 times of oil crisis does not affect
the exchange rate as like as the
gold price.
•Political factors and economic
development X oil crisis.
Current situation
•Demand for crude oil is about 80 million barrels.
•Normally 81 to 97 million barrels of crude oil
produce each day.
•Most countries is just producing at their normal
capacity.
•Crude oil market: Supply > demand
•Big countries keep their oil reserves constantly.
•Supply does not affect the increasing oil price.
•How the market demands them?
•Even though oil price is surging,
people are still willing to pay the
price.
•People push up the demand on
propose and as a result, push up
the oil price.
•No people are willing to pay
higher price for goods except
those who still make a profit after
all.
•If the price of the demand is
high enough and huge in quantity,
oil price would be pushed up.
•Unit together = Enough power.
•No country made a decision to deal
with.
•Still willing to pay whatever the price:
1 .Increasing demand for oil.
2. Fear for the future.
The influence of the increasing oil
price to the economic of the world
is negative.
Increasing oil price make the
economic growth of Petroleum
Exporting Countries is less than the
economic loss of Petroleum Importing
Countries
High oil price will make the market
of international finance have a large
negative influence.
The stocks of Petroleum Exporting Countries
will increase, but the stocks of Petroleum
Importing Countries will decrease.
Example: some developing countries, such as
India
High oil price will make the
confidence of companies and
customers decrease
High oil price will make the
confidence of companies and
customers decrease and increase
the negative effect
But, increasing in oil price is not totally
bad.
Advantages:
•Make the structure of world economic
have adjusted.
•Advance the development of new power.
•Advance the skill of economizing power
•The Chinese petroleum industry has
been the primary beneficiary
•Put a lot of pressure on the
petrochemical industry.
•The petrochemical industry is working to
decrease consumption of materials and
management fees to cuts costs.
•The current domestic crude oil prices
and refined oil prices have gone up with
international prices.
•Because China's crude oil prices and
refined oil prices became linked with
international prices.
•China's aviation industry also facing
challenges.
•The aviation industry's cost
expenditures increased.
•Oil costs took up a greater share of
the airline companies' business costs.
•Negatives effects aren't as serious as
those in developed countries.
•The effect of the oil price increase on
the agricultural, timber and fishing
industry isn't very visible.
•Petroleum only accounts for around
20% of China's energy consumption
structure.
From a long-term perspective,
China's net petroleum imports
increases every year, making China
the country with the fastest growing
demand for oil in the world.
Reasons of lightly increase of oil
price in future 20 years:
•Reserves of the world’s oil still have a
great quality.
•The demand for oil will be exceed supply.
•Restrictions
•Direct participation
Reasons for the widely increased
in price of oil after 2020:
•The reserves of oil will became exhausted.
•The rapid development of many developing
countries
•Make use of oil as “weapon”
•Production cost of oil will become higher
Consider the past experiments that
fluctuate the oil prices:
•Social unstable climate or wars
•Low tide period
•The OPEC countries cooperate to control
the oil supply
•Economic penalty
•Natural condition
•Oil companies controlled new
energy development and the
present of energy-saving system
•New energy development and the
present of energy-saving system
Reasons of affecting the oil
price
•Increase in demand of oil
•Political situation in the production
regions
•Terrorist attack
Another factor that affects the oil
price rise is periodic factor
Price cycle, market cycle,
investment cycle, demand cycle and
seasonal cycle
The demand to oil from the market is
in three styles: consuming,
investment and stockpile
Rapid rise of the oil price will affect the
developing countries and the whole
world economy, but the effect to the
western countries is limited.
OPEC and Iran
Most of the western countries started
the adjustment of the properties
structure
Import diversity of the main
consumption countries
Establish a huge reserve in oil
Highly rely on the sales of oil and
ensure stable supply