Economies, Markets and Strategic Decisions Essay

Economies, Markets and Strategic Decisions - Essay ExampleIt affects almost our entire lives, from the grapheme of our lives, our health and well-organism it determines not only our excerpt of transportation means but also our choice of work, and status2.Oil also affects our economic well-being, family structure, choice of friends and status in the society. It is with no wonder that, All things being equal an development in the demand of a commodity will increase the price in the short run and supply in the long run. This is certainly true, for the short period in the deterrent example of an ordinary commodity. In the discipline of oil, the result is highly dependent on the availability of reserves.In the case of commodity, an increase in price would ensure an increase in supply which would serve to check the wage increase in price. Production on a larger scale leads to improved methods of production, and a fall in price below its original level. In the case of housing, no such reaction is possible3. There is nonentity, to adjudge the price (and the rent) of housing from rising indefinitely without limit, if the demand continue to increase. Conversely, if the demand for houses falls off, there is nothing to check the consequent fall in price and rent. In the case of ordinary commodities, supply would be diminished, because most things are either consumed4.1.2 Demand and Supply Forces determining the price of OilOver the terminal thirty years, OIL prices have risen in real terms by around 2 % a year and according to HM Treasury (2003) report this stands in contrast to other European countries such as Sweden, France, and Germany where real house prices have decline or remain relatively constant.In a study conducted by Guri (2003), it was postulated that low oil supply responsiveness must have contributed in greater trend increase in real oil prices in the world before the extravasation of the credit crunch that started at the end of the year 2007.Accor ding to Kuenny et al. (2007), paradoxically, while there is a worry associated with a shortage of hydro vitamin Cs, there is also a problem associated with their superabundance which results in the release of carbon emissions into the atmosphere producing a dramatic impact on climate (Kuenny 2007). Kuenny (2007) stipulates that, the latter problem appears more Copernican than the former, geopolitical crises, which may be generated by a shortage of hydrocarbons, appear to influence public view more than progressive climate change. Unless new energy fields can beFigure 1 and TwoFrom Figure one above, an increase in the demand for oil from D1 to D2 has not been matched by a corresponding increase in the supply of oil. Oil are not like ordinary commodities. This has hale up price for oil from P1 to P2. This is because with the present state of the world economy, market, higher demand is translated into higher prices than supply. With the governing body weak oil supply in the previo us years, and it inability to assume responsibility to increase the number of oil reserves, prices will continue to increase As supply becomes more elastic over time, take for granted the conditions of demand remain unchanged, we expect to see downward pressure on prices and a further increase in the equilibrium quantity of oil bought and sold5.Because of the time lags and resources