Demand And Supply Oil

Question 1

Why is oil important?

Answer 1

Used in production in a variety of goods
Used in transportation
Used for power generation

Question 2

What does an increase in oil price lead to?

Answer 2

Inflation

Question 3

Is the price in oil stable?

Answer 3

No, it varies

Question 4

What is demand for oil?

Answer 4

Price inelastic

Question 5

What is demand for oil?

Answer 5

Supply inelastic

Question 6

When does demand for oil increase?

Answer 6

Global economic growth

Question 7

When does demand for oil decrease?

Answer 7

Global economic decline

Question 8

How does the US dollar affect the price of oil?

Answer 8

Oil is priced in US dollars
So demand of oil is inverse to value of dollar

Question 9

Why is demand for oil increasing?

Answer 9

As global living standards increase, the demand for oil increases
As improvements in living standards lead to a rise in oil demand

Question 10

What factors affect the supply of Oil in the short-run?

Answer 10

Supply-side shocks
OPEC - Organisation of Petroleum Exporting Countries (KSA, Venezuela, Algeria)

Question 11

What factors affect the supply of Oil in the long-run?

Answer 11

Size of remaining reserves
Cost of production
Efficiency of production