Question

what are some of the complications that attend efforts to ascertain current supplies of petroleum? disscuss your answer in detail?

Answer 1

Petroleum a liquid mixture of hydrocarbons, though it also contains some nitrogen, sulfur, and oxygen. which is found deep within the Earth's surface and can be extracted and refined to produce fuels including petrol, paraffin, and diesel oil and other Byproducts i.e jet fuel, petrochemical feedstocks, waxes, lubricating oils, and asphalt.

The Petroleum Industry, otherwise called the oil industry includes the worldwide procedures of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing of petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum additionally the raw material for many chemical items, including pharmaceuticals, solvents, fertilizers, pesticides, synthetic fragrances, and plastics.

The issues which impact the supply of petroleum is following -

• Price Refers to the main factor that influences the supply of a product to a greater extent. Unlike demand, there is a direct relationship between the price of a product and its supply.

• Geopolitical events and serious climate that disturb the supply of crude oil and oil-based goods to market and can influence unrefined petroleum and oil-based products costs. These occasions may make vulnerability about future stockpile or request, which can prompt higher instability in costs.
• Supply and Demand Impact As with any commodity, stock or bond, the laws of supply and demand cause oil prices to change.

• Cost of Production Implies that the supply of a product would decrease with an increase in the cost of production and vice versa.

• Technology, for example, a better and advanced technology increases the production of a product, which results in an increase in the supply of the product.

• Transport Conditions Refer to the way that better transport facilities increase the supply of products. Transport is constantly a requirement for the supply of products, as the products are not accessible on time because of poor transport facilities. In this way regardless of whether the cost of a product increases, the supply would not increase.

• Government Policies the different policies of the government, such as fiscal policy and industrial policy, has a greater impact on the supply of a product. For example, an increase in tax on excise duties would decrease the supply of a product or vice-versa.

Other factors that influence the supply of petroleum or crude oil.

For several decades, the Organization of Petroleum Exporting Countries (OPEC) has been the elephant on the world's trading floors, with its oil-producing member nations working together to determine prices by boosting or reducing crude oil production. While OPEC's grip on the market has loosened some in past years, its decisions continue to play a dominant role. OPEC's every move is watched closely by governments, oil companies, speculators, hedgers, investors, traders, policymakers, and consumers. In the past, supply disruptions triggered by political events have caused oil prices to shift drastically; the Iranian revolution, Iran-Iraq war, Arab oil embargo, and Persian Gulf wars have been especially notable. The Asian financial crisis and the global economic crisis of 2007-2008 also caused fluctuations. The supply crude oil is also determined by external factors, which might include weather patterns, exploration and production (E&P) costs, investments, and innovations. Source: Investopedia.