The economy is influenced by many factors that determine its surplus or deficit.
Throughout the last several decades, we have seen the world’s dependency on oil and
gas. Also, oil and gas are among two of the most important resources in the globe. As the
demand for oil and gas grows, the American family spends an average of $200 to $300 in
gasoline every month. Oil and gas continue to be major contributors to the stability or instability,
of the larger economies, such as those of the United States, Germany, and Japan, and the
third-world nations as well. The economy is seriously affected when gas and oil prices are on
the rise; however, finding a solution is no easy task when dealing with such a complex global
issues.
The world, as a whole, depends greatly on Oil and gas as their main energy source.
Our economy has continuously shown that it seriously gets affected when gas and oil prices
are on the rise. Over the last several years, the price per barrel has set record highs and
many economist questions whether the price per barrel will ever drop to the 40 or even 50
dollar range.
According to the oil price information service, supplies are still at a relatively
good level, in spite of the growing demand for greater consumption. This demand has
pushed the price of the gallon of gas in the United States from a comfortable amount of
$2.09, to more than $3.115 a gallon, within the last several months. This price surge has
been the highest since last year. Many analysts are in accord with the probability that it will
reach $4 a gallon, by summer’s end.
The catalysts responsible for these sharp increases are directly related to the many
disruptive current events that we hear in our news channels. Recent world events such as the
war in Iraq, the instability in Nigeria, and the conflict between Chavez and Bush have all
contributed to the barrel of oil going up. This in itself has translated to an increase in
gasoline prices. Since our entire economy is oil energy dependent, that has given rise in the
prices of both perishable and nonperishable goods, that Americans purchase. The war in Iraq
has also caused instability in the region and a decrease in production, coupled with an
increase in demand from emerging nation such as China and India.
The Oil rich country of Nigeria has also been dealing with internal political
Conflicts, which has brought about sabotage and chaos in its region. While it is dealing with
these local problems, it to be unable to focus on maintaining a production level needed to
keep the price per barrel of oil at an acceptable level. There are also conflicts of interests
between Venezuela’s president Hugo Chavez and the George Bush’s administration.
Constant quarrels between the two presidents may also fuel the price problems. In
addition, the falling American dollar, coupled with the United States credit woes in the
secondary mortgage market and its ominous banking industry, the U.S. dollar’s purchasing
power continues to get battered.
One of the greatest questions that have loomed over the Organization Petroleum
Exporting Countries (OPEC), the ability to keep the price of oil below an acceptable level is
whether or not OPEC will have the capacity to produce an average of 20 million barrels of
crude oil, per day. There is no secret that OPEC has been known to submit false capable
production numbers on several occasions.
The international markets have, on several occasions, questioned whether or not they
are capable of meeting the required production levels, or are they simply in a position where
they may not be able to sustain the needed production levels, to combat the increasing price
of gas. With these issues looming over our minds, the United States is now in a position
where it must allocate a good amount of time and resources to curtail its dependency on
foreign oil. Over the last several decades, there has been discussion amongst the different
administrations that have governed the United States.
With the price of a barrel of oil surpassing the $110 mark, the need to put into action
one of these plans is of utmost importance. By developing alternative sources of energy, we
can place ourselves in a position where we can begin to promote a less costly energy. One of
the most discussed options is the drilling in the Artic National Wildlife Refuge, which is
located in the northeast area of Alaska. Since the 1950’s, there has been considerable
discussion about its role in minimizing our dependency on foreign oil; however, the cost of
this exploration will likely result in an insurmountable cost, that will be measured not on a
monetary level, but on the loss of animal species and the habitat where those species reside.
Information gathered from the biological, seismic and geological studies were used to
complete a Legislative Environmental Impact Statement (LEIS) that described the potential
impacts of oil and gas production in these areas. The results found has supported the
environmentalist claim that drilling will result in irreparable loses to several species that are
common to the serene habitat. In addition, whether or not, the areas have the necessary
amounts of crude oil in the grounds has become a difficult question to answer. Although
production has been going on in Alaska, on the Naval Petroleum Reserve since the 1960’s, it
is at a very low minimum and it is not likely to impede on the ramped price increases that
we are seeing. Suppose the domestic production levels were sufficient to keep prices at
bay, would our problems be resolved? The unfortunate answer to that questions is no,
because during the early 1900’s, there were heavy tariffs imposed on domestic oil drilling.
These tariffs were created to keep oil companies form drilling in these areas. During these
early times, foreign oil dependency became that much more appealing, because there was
never a tax imposed on the imports of foreign oil. As a result, oil and gas became cheaper
and safer to be imported from the other oil rich countries in the Middle East, Africa and
South America. In essence, the good tariff tax that were levied some 60 years ago are now
not so good, as far as it concerns, to make a strong argument in extracting domestic crude oil
today. As a result, environmentalist are determined to keep serene frontier less prone to
species and terrain depletion.
With so many different issues that we must contend with, to extract crude oil
for our personal consumption, it is not difficult to understand why it is has always been a
very complex issue that the world must deal with. There is no real definitive solution to this
Problem and as more problems come about, we are likely going to see this problem
manifesting to major global problem.
"The economy is seriously affected" -- what does that mean exactly?
look wha is happening to the economy today.
My point is that simply saying "seriously affected" is very general. HOW is the economy affected? What are the results?
Writeacher is correct -- she wants you to be specific.
Ms. Sue,
How should I present this then.
The passage discusses the influence of oil and gas on the global economy and the factors that affect their prices. It highlights how the demand for oil and gas influences the prices and how disruptions in oil-producing regions or conflicts between countries can cause instability in the economy. Additionally, it mentions the impact of the falling American dollar, credit woes, and the problems faced by OPEC in meeting the required production levels. The passage also mentions the need for the United States to reduce its dependency on foreign oil and discusses the potential impacts of drilling in the Arctic National Wildlife Refuge.
To understand the factors that influence the economy's surplus or deficit, one needs to consider various factors like supply and demand, geopolitical events, currency fluctuations, and global market trends. Here's a step-by-step breakdown of how to analyze the factors influencing the economy:
1. Start by analyzing the supply and demand for oil and gas. Look at trends in consumption and production levels, as well as any factors that may disrupt supply, such as conflicts or natural disasters. In the passage, the growing demand for oil and gas is mentioned, as well as disruptions in oil-producing regions like Iraq and Nigeria.
2. Consider the impact of geopolitical events on oil and gas prices. Conflicts between countries, such as the war in Iraq or conflicts between Venezuela's president and the U.S., can contribute to price instability. These events can disrupt production and transportation of oil and gas, leading to price surges.
3. Take into account the impact of currency fluctuations. A falling currency, like the American dollar mentioned in the passage, can increase the price of imported oil and gas, thus affecting the overall economy and consumer spending.
4. Look at global market trends and the actions of organizations like OPEC. OPEC plays a significant role in controlling oil production levels and influencing prices. If they fail to meet the required production levels or if there are doubts about their numbers, it can contribute to price increases and market instability.
5. Analyze the potential impact on the economy. Higher oil and gas prices can affect consumer spending, as mentioned in the passage where the average American family spends a significant amount on gasoline. Higher energy prices can also lead to increased costs for businesses, which can result in higher prices for goods and services, potentially leading to inflation and economic instability.
6. Consider possible solutions to reduce dependency on foreign oil. In the passage, the drilling in the Arctic National Wildlife Refuge is mentioned as a potential option, but it also highlights the environmental and cost implications that need to be considered.
In summary, understanding the factors that influence the economy's surplus or deficit requires analyzing supply and demand, geopolitical events, currency fluctuations, market trends, and potential solutions to reduce dependency on foreign oil.