Business Environment

Oil Crisis
Andre Fernandez 04 Revati Ranade 33 Satyamvada Sharma 42 Vaidehi Naphade 49

Oil Price History

Oil Price History

Oil Prices -Two Centuries

Oil: Pricing Determinants
‡ Prices have always been volatile ‡ Oil makes up half the cost of gasoline ‡ Gasoline tends to be an inelastic commodity

Points that disrupt/determine the supply (and cost) of oil ‡ Extraction 40% ‡ Distribution 15% ‡ Refining 15% ‡ Taxes

Important influencers of prices globally
‡ Production ‡ Natural causes ‡ Inventory ‡ Demand

What oil prices have done to India
‡ First oil shock - October 1973 ‡ Second oil shock - 1979-80 ‡ Gulf crisis sparked off a sharp spurt in oil prices

Oil price and the $700B bailout
‡ ‡ ‡ ‡ Danger of devaluation Prices kept artificially low Bought and sold in dollars The dollar is becoming "funny money"

Fuel Efficient Cars Lead To Lower Oil Prices
‡ 1% reduction consumption = oil price drops of 2% ‡ Economic benefits of energy efficiency measures seriously underestimated ‡ Environment will pay a high price for cheaper fuel ‡ Advocating higher fuel taxes

Peak Oil
Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the Rate of production enters terminal decline

Peak Oil - contd
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡

Earth's endowment of oil - 2 tr barrels of recoverable oil Half is used up Consumption is currently 31 billion barrels each year Oil will be gone in 32 years at current rates There will be demand for oil, even if it is expensive Very little oil found within past 30 years Oil production in Middle East and Russia not yet peaked Peak oil production does not mean the oil is gone

Peak Oil
‡ World peak oil production reached its peak in 2005 ‡ Oil prices will decline leading to a fall in demand ‡ Prices will fall once again causing demand to pick up

Swenson s law:
This graph depicts possible alternative scenarios for humanity as oil goes into decline over the next few decades.

To avoid deprivation resulting from the exhaustion of non-renewable resources, humanity must employ conservation and renewable resource substitutes sufficient to match depletion.

‡ Oil depletion is inevitable ‡ The maximum production of oil from a field ‡ The production of an oil field increases exponentially then terminally declines

Have we reached the peak oil??
‡ An irreversible decline in the oil production ‡ Peak oil occurs when 50%of reserves have depleted

Politics in Oil
‡ Quota agreements ‡ Peak oil ‡ Pipeline diplomacy in Central Asia ‡ Petroleum politics ‡ Politics of alternative fuels ‡ Politics of Oil Nationalization

Alternative Resources
‡ Renewable energy ‡ Wind power ‡ Hydro Power ‡ Waste recycle ‡ Solar power ‡Bio-fuel:
a) Liquid Bio Fuels b) Solid Bio-fuels c) Bio Gas

‡Geo-thermal ‡Other Alternatives

Thank You

Sign up to vote on this title
UsefulNot useful