• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

world oil market

Extracts from this document...

Introduction

COURSEWORK ASSIGNMENT 1) Describe the world oil market The world oil market structure is quite unique due to the importance of oil to the global economy and its relative scarcity. It is still unclear how much oil there really is left due to differing views amongst geologists. What is agreed is that the scarcity of oil is a major concern for the global economy and its likely the peak in old production will be seen by this generation. All fossil fuels such as oil and gas are slowing running out; renewable sources will be needed in the future to generate all electricity. When it comes to fuel used for transport, all planes and cars are reliant on oil by-products such as petrol and diesel, the technology isn't there yet for electricity to be viably used as a substitute for petrol in cars, with existing technology electric cars can't go very fast which puts off the consumer, also for electric cars to be an option huge investment must be made for installation of car charging stations which will take many years to administer as well as resources. While oil reserves are depleting demand is growing at a phenomenal rate, world population is growing as well as living standards causing oil consumption to rise as there are more people and each of them is using even more electricity. ...read more.

Middle

Barriers to entry are very high making it impossible for firms to enter the market, this allows the monopoly firm to make abnormal profits, they are price makers not price takers. Oligopoly: Oligopolistic market is when a few firms have most of the market share, they usually don't compete on price, and their products are usually homogeneous or differentiated. By dominating the market together they have the ability to set prices. In an oligopolistic market firms sometimes have the ability to collude and set prices higher in order increase profit maximisation. High barriers to entry usually exist to put off new entrants such as high setup cost in high tech markets or high advertising costs such as in the UK soap powder market. I think the oil market resembles a oligopoly as there a few suppliers and a very large market, OPEC members collude to control world price, although they only control 40% of supply due to price elasticity of demand for oil being very low they are able to influence the price. Barriers to entry are high as oil production is restricted to those countries that have reserves. I think there is a small difference to the traditional form of the oligopoly as OPEC although it represent many oil producing countries it ...read more.

Conclusion

will increase as well as the cost of production, people can live without them more easily rather than heating, in general the more of a luxury the product it is the less the increased cost will be passed as more people will make do it without it. Newly industrialised countries will suffer greatly as these industries will make up most of their economic output which will all suffer due to the increased of power, while developed countries like the UK will suffer proportionally less as the services sector is larger as a percentage of total economic output compared to third world countries. Developed countries produce more high tech goods which in terms of the cost of production the fuel required is proportionally a less significant amount compared to less high tech products being produced in nearly industrialised countries such as China where the cost of power is a much larger proportion of the cost of production. In the long run new sources of fuels will have to be used such as other fossil fuels such as natural gas as well as nuclear power, investment in renewable energy sources will increase as all fossil will run out in the future and the main solution will be renewable energy sources such as solar and wind. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Peer reviewed

    Explain the main features of the behaviour of firms which operate in an oligopolistic ...

    5 star(s)

    However with the introduction of cable and sky theses barriers to entry have been reduced as it is now cheaper to enter the market new technology has helped this too. Oligopoly firms are also profitable in the long run, as shown within the broadcasting market Sky run huge abnormal profits

  2. Congestion Charging

    the benefits stay the same and so the overall external cost is labelled x. Another failure the congestion charge was intended to correct was the number of people using public transport in central London. Too few people were using it and so the congestion charge aimed to change this.

  1. As time progressed, the United State's dependency for foreign oil has tremendously grown and ...

    To run a great country, you need great transportation. For great transportation, you need a way to propel the vehicles; this creates our great need of oil. We are the world's major oil consumer, with a per capita consumption of 28 barrels a year, compared to only two barrels a year for a Chinese citizen.

  2. Kingfisher is the largest home improvement retailer in Europe and the third largest in ...

    These policies have increased profit after tax by �0.9m and decreased reserves by �145.6m in 2004. These policies have overall improved the return on equity ratio and will affect the profitability of the company. Kingfisher has increased its provisions for liabilities and charges in order to smooth over earnings in

  1. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    During the next five years, they were a clear difference in movement emerging. Persimmon largest percentage increase followed by Bellway then Wilson Bowden. Investment Ratios RATIO30 COMPANY Industry31 2005 2004 2003 2002 2001 P/E Bellway 11.29 6.4 6.2 5.7 5.5 5.6 Wilson Bowden 8.7 6.1 6.2 5.4 7.8 Persimmon32 11.0

  2. An investigation into oil prices

    A way to overcome this would be to invest in exploration of new reserves to prolong the supply. And although this seems easy to do it requires tremendous amounts of money and needs to be perfectly times as to the current economic state of the market.

  1. Is residential property in the UK a good investment?

    Housing Market that is on the verge of bursting? I do not profess to be any sort of expert on this subject but having done extensive reading regarding this subject, I have formed some conclusions of my own. I do not think that the housing market is liable to a

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    The services and goods produced all together in this country are worth more than $23,864 per head. Each capita is estimated to have the spending power of $22,190 in PPP, which is just about $489 more than Austria's head. Belgium is very developed and industrialised because they export many manufactured goods.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work