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7-12 > Week 11 > Flashcards

Week 11 Flashcards

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1
Q

What was the initial use of gasoline before the internal combustion engine?

A

Gasoline was a byproduct of refining oil into kerosene and had limited use, often being discarded into rivers.

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2
Q

When were internal combustion engines first developed?

A

Internal combustion engines were developed in Germany in the 1870s, with Karl Benz beginning commercial production in the 1880s.

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3
Q

What was the impact of Bertha Benz’s journey on the automobile industry?

A

Bertha Benz’s journey demonstrated the practical use of the automobile and helped increase public awareness of internal combustion engines.

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4
Q

How did gasoline create new markets in the early 20th century?

A

Gasoline, once discarded, became a vital fuel due to the rise of the internal combustion engine, creating a new market for what was previously waste.

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5
Q

Who was William Knox Darcy and how did he influence the oil industry?

A

Darcy developed the oil industry in Persia and elsewhere in the Middle East, founding what became British Petroleum (BP).

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6
Q

What role did John D. Rockefeller play in the oil industry?

A

Rockefeller founded Standard Oil, capitalizing on the increased demand for gasoline and turning Standard Oil into a virtual monopoly.

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7
Q

What technological advancements helped the gasoline-powered car become widespread?

A

The power of gasoline engines, combined with Henry Ford’s Model T, made the automobile more affordable and widely available.

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8
Q

How did the growth of the automobile industry impact society?

A

The rise of cars led to the expansion of highways, suburban sprawl, and the need for gas stations, reshaping urban landscapes.

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9
Q

How did gasoline affect oil exploration in North America?

A

The increased demand for gasoline spurred oil exploration in Alberta, Canada, and Texas and Oklahoma in the U.S.

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10
Q

What role did gasoline play in warfare?

A

Gasoline became essential in fueling tanks, ships, planes, and other military vehicles, making it a strategic resource during wars.

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11
Q

What political event in 1953 highlighted the influence of oil on global politics?

A

The CIA and UK orchestrated a coup in Iran to replace Premier Mohammad Mossadeq with a government more favorable to the oil industry.

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12
Q

What was the impact of OPEC’s oil embargo in 1973?

A

OPEC’s oil embargo caused a recession in Western economies by limiting oil supplies and raising prices.

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13
Q

What environmental challenges are associated with gasoline and oil?

A

Gasoline use, transportation, and production contribute to carbon emissions, environmental damage from spills, and land issues related to pipeline construction.

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14
Q

How important is oil to the Canadian economy?

A

Oil, particularly from Alberta, remains crucial to Canada’s economy, with significant involvement from companies like Imperial Oil and PetroCanada.

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15
Q

What was PetroCanada’s original purpose, and how did it evolve?

A

PetroCanada was originally a crown corporation intended to serve as a “window” on the oil industry but was privatized in the 1980s.

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16
Q

What is petroleum, and how is it formed?

A

Petroleum, or crude oil, is a fossil fuel created by the decomposition of organic matter over millions of years, used primarily as fuel.

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17
Q

What are some of the advantages of using petroleum as an energy source?

A

Petroleum is a stable energy source, easily extracted, versatile in its uses, and highly transportable.

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18
Q

What are the environmental disadvantages of petroleum?

A

Petroleum extraction and transportation are harmful to the environment, contributing to carbon emissions and ecological damage.

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19
Q

How is oil classified in terms of its origin and composition?

A

Oil is classified by its geographic location, sulfur content, and API gravity, which measures its density.

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20
Q

What is the role of geologists and engineers in oil exploration?

A

Geologists and engineers use seismic reflection techniques to study geological structures and identify potential oil reservoirs.

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21
Q

What are exchange-traded funds (ETFs), and how do they relate to the oil industry?

A

ETFs like the Invesco Dynamic Energy Exploration & Production ETF provide investors with direct access to the oil and gas sector.

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22
Q

How does OPEC influence global oil prices?

A

OPEC sets production quotas for its members, controlling a significant portion of the world’s oil reserves, and thereby influencing global oil prices.

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23
Q

What factors determine OPEC’s ability to affect oil prices?

A

OPEC’s influence depends on member compliance with quotas, consumer responses to price hikes, and the competitiveness of non-OPEC producers.

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24
Q

What is the role of Saudi Arabia in the global oil market?

A

Saudi Arabia, the largest OPEC producer, holds significant spare oil production capacity, which allows it to influence global oil prices.

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25
What is a "tight market" in oil terms?
A "tight market" refers to a situation where demand for oil exceeds supply, causing prices to rise as buyers compete for limited resources.
26
What impact do geopolitical events have on oil prices?
Political upheavals and conflicts in oil-producing regions, like the 1973 oil embargo or the Gulf Wars, can cause supply disruptions and price volatility.
27
How can weather events affect oil prices?
Severe weather, like hurricanes in the Gulf of Mexico, can reduce oil production and refinery output, driving up prices.
28
Why are oil markets considered "price inelastic"?
Both supply and demand for oil are relatively unresponsive to short-term price changes, requiring large price shifts to balance the market.
29
What is the global auction system in oil markets?
Oil markets function as a global auction, where buyers bid for oil, with prices rising in tight markets and falling when supply is abundant.
30
What are futures markets in the oil industry?
Futures markets allow producers and consumers to lock in prices for oil in advance, providing price certainty for both parties.
31
What is the difference between futures and spot transactions in oil trading?
Futures transactions are agreements to buy or sell oil at a set price in the future, while spot transactions involve immediate purchases at current market prices.
32
How do fluctuations in oil prices affect global economies?
Oil price fluctuations impact global trade, with high prices leading to economic strain on oil-importing nations and benefiting oil-exporting nations.
33
What are the main challenges in predicting oil prices?
Oil price predictions are uncertain due to geopolitical events, weather conditions, and dynamic market conditions.
34
What long-term factors influence oil prices?
Long-term trends in energy transitions, production capacity, and global demand patterns play a significant role in shaping oil prices.
35
What is the role of OPEC in managing global oil production?
OPEC attempts to manage production by setting quotas for its members, aiming to stabilize global oil prices and ensure fair pricing.
36
What is Brent Oil, and why is it important?
Brent Oil, sourced from the North Sea, is a global benchmark for oil prices due to its light, sweet quality and accessibility.
37
What is the pricing difference between Brent Oil and West Texas Intermediate (WTI)?
Brent Oil generally commands a higher price than WTI due to its ease of transport and higher quality, while WTI is often discounted due to its landlocked production.
38
Why is Alberta's oil priced lower than Brent and WTI?
Alberta’s oil is priced lower due to its heavier, less refined nature and the logistical challenges of transporting it to international markets.
39
What is Dilbit, and why is it priced at a discount?
Dilbit is a blend of bitumen and diluents used to transport oil sands products, priced lower than other oils due to its heavier composition and higher transportation costs.
40
What is the concept of "bitumen netback"?
Bitumen netback is the effective price producers receive after deducting transportation costs, including diluent and pipeline fees.
41
How does transportation infrastructure affect oil pricing in Alberta?
Limited transportation infrastructure increases the cost of getting Alberta’s oil to market, contributing to price discounts compared to Brent and WTI.
42
What are royalties in the context of the oil industry?
Royalties are payments made to the resource owner (often governments or landowners) based on the value of the oil produced.
43
How do transportation challenges affect Alberta’s oil revenue?
Transportation challenges, such as limited pipeline access, can reduce the price Alberta receives for its oil, ultimately impacting revenue and royalties.
44
How did the Yom Kippur War affect global oil markets?
The Yom Kippur War led to an oil embargo by Arab OPEC members against countries supporting Israel, resulting in oil shortages and price increases.
45
What is the relationship between geopolitical events and oil supply disruptions?
Political upheaval in oil-producing regions, such as conflicts or sanctions, can disrupt supply chains, causing oil prices to fluctuate dramatically.
46
How does OPEC’s production quota system work?
OPEC sets quotas for its member countries to control the amount of oil they produce, attempting to stabilize prices by regulating supply.
47
What impact does the price inelasticity of oil have on market adjustments?
Oil price inelasticity means that production and consumption cannot quickly adjust to price changes, often resulting in large, rapid shifts in prices.
48
How do seasonal weather patterns affect oil prices?
Cold weather can increase demand for heating oil stabilizing oil prices?** OPEC aims to stabilize oil prices by managing production targets and controlling the global supply of crude oil.
49
What caused the 1973-74 Arab oil embargo?
The embargo was a response to the Yom Kippur War, where Arab OPEC members cut off oil supplies to countries supporting Israel, driving up oil prices.
50
What is the significance of Brent oil in global markets?
Brent oil is a major global benchmark for oil pricing, known for its light, sweet quality and ease of transport via coastal ports.
51
Why does West Texas Intermediate (WTI) oil typically sell at a lower price than Brent oil?
WTI oil often sells for a discount due to its limited exportability and its production being landlocked, unlike Brent oil.
52
What is Western Canada Select (WCS), and why is it priced lower than WTI?
WCS is a heavy oil benchmark from Canada that is priced lower than WTI due to its higher viscosity and location further from key markets.
53
What is Dilbit, and why is it priced at a discount?
Dilbit is a blend of bitumen and diluents used for transporting oil sands products, priced at a discount because it requires more processing.
54
What is bitumen netback, and how does it impact oil prices?
Bitumen netback is the effective price producers receive after deducting transportation costs, directly impacting the revenue generated from oil production.
55
How do transportation issues impact oil pricing?
Problems with pipelines, refinery outages, or infrastructure issues can disrupt the flow of oil, causing temporary price spikes.
56
Why do Alberta's oil products often receive lower prices than Brent and WTI?
Alberta’s oil is priced lower due to its heavier quality and geographic disadvantage, which increases transportation costs to coastal markets.
57
What is the significance of OPEC's role in global oil supply management?
OPEC's ability to manage oil supply through production quotas allows it to influence oil prices globally and ensure fair pricing among member countries.
58
How do OPEC's policies affect non-OPEC oil producers?
OPEC's production quotas can increase or decrease global oil supply, impacting non-OPEC producers who must compete in a changing market environment.
59
How does political instability in oil-producing regions affect oil prices?
Political upheavals in key oil-producing countries, such as the Middle East, can disrupt oil supply, leading to uncertainty and price volatility.
60
What was the impact of the Persian Gulf War on oil prices?
The Persian Gulf War caused significant disruptions in oil production and supply, leading to price fluctuations and geopolitical tensions.

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