Microeconomic (Project 1) Jamal Nasser Ba-Dhafari
Report Title: - Demand and Supply of OilStudent Name: - Jamal Nasser Ba-DhafariID Number: - 970002058Programme: - Engineering Management Bachelor of Applied Science(International and UAE Economics EMGT 410)College Teacher: - Mr. Nihad HamidDate: - 14/12/2002Table of Contents PageIntroduction 3Demand of Oil 3Supply of Oil 5Supply and Demand Equilibrium for Oil 6Conclusions 6References 7IntroductionOil is one of the most valuable and scarce energy resources in the earth, and in order to assess the recent developments in the price of Oil in world trade, it is important to analyze the underlying forces of demand and supply. As energy is an important vehicle of production and growth, Oil is still its main source and has no competing substitute to replace it altogether in the foreseeable future. The UAE is one of the biggest suppliers of the Oil in the world, and as a member of OPEC price and supply of Oil is controlled by the 10 members of the OPEC and Non-OPEC countries.
Tq Oil Demand
Tq Oil Supplied
Demand of OilDemand for Oil is a derive demand according to its many diverse uses. Oil can be used to satisfy the needs of Mankind. Oil is used as the main source of energy and as the major input in all petrochemical industries, which could provide us with our needs. Demand for Oil within a certain band of process and within a certain time interval is inelastic. This means that if there is a relative increase in its price within a certain affordable band, the relative change in the quantity demanded for Oil will turn out to be less than the relative change in its prices. So quantity demanded for Oil related to its price. Consumers are rational decision makers, therefore if price of Oil is acceptable they decide to buy more to maximize their benefits and vise versa.The graph bellow shows the price of Oil Verses the Demand of Oil by consumers.The effect of increase in demand (excess of demand) for Oil causes the curve to shift inward and leading to an increase in Oil prices. On the other hand Suppliers always tries to follow the demand curve by increasing their supply of Oil to keep the prices of Oil stable.Supply of OilFaced with such an inelastic demand within a certain affordable bad of prices, Oil producers could always increase their revenues if they offer fewer units for sale. So supply restriction is then a method by which Oil producers could increase their revenues. And they try to maximize their Oil revenue without interrupting the demand of Oil by the consumers. They try to keep price level under which new Oil development...