This research analyzes the impact of oil prices volatility on overall economic growth, with a case study on the United States. It explores the concept of oil price volatility, its causes, and its impact on the economy, as well as the risks faced by oil and gas companies in the US.
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Oil Prices Volatility and Economic Growth
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Table of Contents TOPIC: Oil Prices Volatility and Economic Growth......................................................................................................3 INTRODUCTION..........................................................................................................................................................3 Background of research.......................................................................................................................................3 Rationale of study................................................................................................................................................3 Aims and objectives of research..........................................................................................................................4 Research questions...............................................................................................................................................4 Significance of research.......................................................................................................................................4 LITERATURE REVIEW...............................................................................................................................................6 Concepts for oil price volatility...........................................................................................................................6 Different causes of oil prices volatility................................................................................................................7 Different risks faced by oil and gas companies in United States.........................................................................8 RESEARCH METHODOLOGY..................................................................................................................................11 Investigation type...............................................................................................................................................11 Research approach.............................................................................................................................................11 Research philosophy..........................................................................................................................................11 Data collection method......................................................................................................................................12 Sampling............................................................................................................................................................12 Ethical considerations........................................................................................................................................12 DATA ANALYSIS AND INTERPRETATION..........................................................................................................14 RECOMMENDATIONS..............................................................................................................................................23 Recommendation...............................................................................................................................................23 Reflection...........................................................................................................................................................23 CONCLUSION.............................................................................................................................................................24 REFERENCES..............................................................................................................................................................25
TOPIC:Oil Prices Volatility and Economic Growth INTRODUCTION Oil price volatility is defined as the extent to which the prices of oil increase or decrease over a time period (Bouzid, 2012). The economic growth of the country is hurt by the volatility in prices of oil. In recent years, the nature of energy prices daze and their impacts on economy and its growth has evolved dramatically (Oil Price Volatility: Origins and Effects, 2020). Because of exceptional significance of crude oil in supply of energy demands in world, it has become a leading indicator of activities of economy. The sharp rise in volatile exchange rates and oil prices are regarded as the components of discouraging growth of economy. An increase in prices of oil is considered as good for the countries which export oil and bad for the nations which import it. Through the transmission mechanism of demand and supply, the prices of oil influence real economic activity. This dissertation is based on the topic “To analyse the impact of oil prices volatility on overall economic growth. A case study on United States”. This research is conducted to understand the concept of oil prices volatility, its causes and impact on economy along with the determination of risks faced by oil and gas firms in United States. A detailed background of investigation is presented underneath. Background of research Oil price volatility is one of the crucial aspect that highly impacts the growth of economy in any country. The rise or fall in oil prices influence its demand and supply in country. In the economy of world, crude oil is a critical driver and the changes in its price have significant impacts on growth of economy. The economic effects of increase or decrease in oil prices have been documented in many studies and it depicts that for oil importing economies which are developed, an increase in prices of oil is harmful to macro economic indicators, especially gross domestic product. This research is conducted with the purpose of analysing the impact of oil prices volatility on economic growth of United States. By performing this investigation, large amount of information and data will be collected and valid conclusion will be drawn based on the entire study. Rationale of study The research is conducted so as to analyse the impact of oil price volatility on economic growth of United States. The rationale for conducting this research is to determine the influence
of rise or fall in prices of oil on growth of economy. By conducting this study, the researcher enables to fulfil the aim and objectives of research. It also helps in gaining knowledge about the topic as well as the other areas associated with it. This particular study helps investigator in understanding how the oil prices volatility and economic growth are interrelated and impact the growth of country. This helps in determination of risks that are faced by oil and gas organisations in the country (Le and Chang, 2013). Aims and objectives of research Aims and objectives provides the basis forconducting the entire research. It directs the activities of research and enables researcher to fulfil the purpose of research. This investigation is based on the topic“Oil Prices Volatility and Economic Growth” and the aim and objectives of this research are mentioned below: Aim: “To analyse the impact of oil prices volatility on overall economic growth. A case study on United States” Objectives: To understand the concept for oil price volatility. To determine the different causes of oil prices volatility. To identify different risks faced by oil and gas companies in United States. To assess the influence of oil prices volatility on economic growth of United States. Research questions What is the reason for oil price volatility. What can be the different causes of oil prices volatility. What are the different risks faced by oil and gas companies in United States. What is the influence of oil prices volatility on economic growth of United States. Significance of research This research is based on topic: “To analyse the impact of oil prices volatility on overall economic growth. A case study on United States”. This study is very significant as it helps researcher in gaining deep insights on topic and understanding the concept of oil prices volatility. It also helps in identifying the distinct causes due to which the prices of oil rise or fall over a span of time. Apart from this, different risks which are faced by oil and gas firms can also be
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determined by the researcher by conducting this study. Hence, it can be said that this study is highly significant for researcher in analysing the influence of oil price volatility on growth of economy in United States (Cashin, Mohaddes and Raissi, 2017). In addition to this, this study is also important for academic view point as well, as it ensures inclusion of data related to impact of oil price volatility on economic growth of countryin large amount. This will provide a base to other scholars to perform research on the similar topic and draw valid outcome from the study.
LITERATURE REVIEW Concepts for oil price volatility "Price volatility" depends on the amount of market increases or decreases over a time frame. Prices reflect documented actual and projected potential supply and demand situations and variables that might influence them in an effective market. In the opinion ofNick Sciple, 2020 the price per barrel of oil and petroleum could be influenced by incidents, like geopolitical and climate changes, that may disrupt the supply of oil and products on the marketplace. Such kinds of events increasing lead to real or potential equilibrium fluctuations and may result in higher price fluctuations. The instability in oil prices is intrinsically linked with both market forces' and short-term price changes or in-elasticity. Both the potential of output of petroleum products and the facilities used as their primary source of energy are relatively short-term solutions. New sources of supply or output differ over years and customers will have great difficulty converting onto other products or growing the fuel economy in the future as prices go up. In these situations, a major price shift can be appropriate to s actually-balance the actual supply and demand after a system shock. Much of the globe's crude oil is found in areas which have traditionally been vulnerable to political instability or have experienced major disturbances in their production of oil. Number of primary oil prices shocks also occurred in the meanwhile and the supply of crude oil also gets disruption fluctuation because of political event such as the incident of Arab Oil Embargo 1973-74. Moreover the Iranian revolution as well as recent war better U.S and Iran also lead to crude oil price volatility. More recently, disruptions to supply (or curbs on potential development of resources) from political events have been seen in Nigeria, Venezuela, Iraq, Iran, and Libya. Crude oil volatility also depended upon oil reserves to accomplish the future supply in all over the world. It includes all usable in U.S. pipelines and the tactical oil stocks. These stocks can be easily managed to increase the availability of oil at unsustainable costs. In its large reserve capability, Saudi Arabia will tap. The Energy Information Administration shall provide these forecasts weekly. During most of the summer driving period there is increased demand. For the intent of estimation of demand, AAA travel projections are used to assess future use of fuel. Weather forecasts will be used during winter to assess the future use of domestic heating oil.
Different causes of oil prices volatility In commodity markets, volatility in prices is intrinsic, but has been retreating at rapid rate in the market of crude oil as compared to the other goods over past decade. It is reflecting the condition of as most globalized good (Tokic, 2015). There are so many factors due to which the prices of oil are impacted, but are specifically responsive to the decisions regarding output made by organisation of petroleum exporting countries (OPEC). By mapping the prices of oil against GDP growthof world, the relationship between sharp increase in prices and the economy of world can be observed (Oil Price Volatility: Causes, Consequences, and Remedies, 2018). In the present world, crude oil or black gold is consider to be most precious and valuable commodities. It is obvious that changes in the price of good can impact the economic level at every stage including family earning as well as GDP of the nation. Moreover, unwanted drop in price or uneven strike can make the international market in a tizzy. According to Eva Regnier, 2007, the price of black gold and other energy resources have been more volatile than any other commodities. Price of crude oil actually are far more unpredictable than around 65 percent of others commodities. Moreover the variability of oil prices also surpassed the crude commodity average after a 1986 collapse in gasoline prices.There have been number of factors which impact the prices of oil such as financial crises, sudden downfall in refining system, war between two countries etc. The influence of worldwide financial crises on return of oil is basically negative due to which there is huge extension in price of crude oil. In general, the reaction of the oil prices reflect to various OPEC manufacture announcements which are not favorable. Some of the common reason for unevenness in the prices of oil are as follows: OPEC:The organization of Petroleum Exporting countries, it consider to be the main influencer that use to vary oil prices in particular time. There are mainly 14 countries included in OPEC that have a control of about 40% supply of crude oil all over the world. Thus the consortium use to fix the manufacture level in order to meet the overall demand of oil and as a result can impact the prices of oil and gas by varying the production level. Supply and Demand Impact:The law of demand and supply use to impact the prices of oil such as in case supply is more than demand then price use to get reduce and reverse is also true when demand surpasses the supply. The drop in petrol prices in 2014 is a result of the lower production demand in Europe and China paired with such an increasing surplus of OPEC crude. The surplus oil supply has contributed to steep fall in oil prices. From that point, oil prices varied
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and by September 2019 were expected to be around $54 a barrel. It is also stated that in case when oil prices are influenced by demand and supply than it is actually the oil features that use to fix the price of oil. A future agreement over oil is a contractual tender which gives a seller a privilege in the potential to purchase a barrel of oil at a fixed price (Fatás and Mihov, 2013).Fluctuation in prices of oil and gas products. 2020.Influence of oil prices volatility on economic growth of United States. 2020.Eva RegnierNick Sciple). The purchaser and dealer of the oil are obligated to make the payment on a particular date, as stated in the agreement. Natural Disasters and Politics conditions:The another crucial factors which have a major impact on the oil prices is natural disasters. Such as at the time of hurricane Katrina the 19% of U.S oil supply get impacted. So as a results the prices per barrel increases by $ 3, moreover the flood from Mississippi river also gets impacted that leads to reduce the prices in year 2011. Political conflict in the middle east is fluctuating from a global context as when the oil production in the area contributes for the lion's share in the country. Of starters, by the instability and investor concerns in Afghanistan and also in Iraq in July 2008, the price of oil exceeded 136 dollars. Production cost and storage also have impact:Cost of production also modify the prices such as more production the supply is higher and prices are stable for buyer and vice versa. U.S manufacture also impact the oil prices such as the aggregate production level in a day in U.S is 9 million. But the level of production is continuously decreasing due to which oil prices getting increased. In present time, one of the major reason for increase in the prices of oil is low storage of oil that influence the investment level. Slowing down production and upgrading the pipeline capacity would, nevertheless, reduce the likelihood that oil infrastructure will reach the capacity, allowing consumers to eliminate concerns of too much output and rising oil prices. Different risks faced by oil and gas companies in United States United States is one the leading producer of crude oil and petroleumproducts, till 2014 profitability ratio of American oil industry market was high as compare to their rivalry countries. But due to lack of economic stability oil and gas industries of United States suffers from various problems to run their business in global market area (Sadorsky, 2012). Following are risk faced by oil and gas companies of united states: Political wars:America is faces political instability within and outside country. Due to unethical uses of weapons Americaprohibited Iran, North Korea, Pakistan China for
runningtheirbusinessactivitieswithUSA.Thiswillnegativelyimpactonthe profitability ratio of oil industries because oil industry supply their products and services in these countries. On the other side present president of America changes all regulation and policies which adversely effect on these industries life cycle, they also prohibited to trade with those countries who maintain trade relation with their rivalry countries. America makes policies under which they ban India t due to tariff war arising between America and Russia. These type of policies adversely effect oil and gas industries of America. Changes in legal policies:US department of States has been changing polices related to ethical and legal requirements. They implement rigid policies, thus it is hard for oil and gas companies to easily run their business in competitive environment. Fluctuation in prices of oil and gas products:Fluctuation rate of oil and gas products are very high thus it become difficult for companies to maintain their particular price strategies they need to change their strategies with changes in price of their rivalry industries. High rate of competition: Oil and gas companies are run their business in oligopoly market, still they faced high competition in market. UAE, companies gave them toughest competition as they sell their product at minimum prices. Climate changes: America is suffering from climates changes problems due to this problem industries cannot uses their resources in a proper way and their period of operating cycle changes (Bernanke, B., 2016). Lack of liquidity assets:Many oil and guess industries in America tries to maintain their liquidity level but due to their managerial policies and changes of other risk factors American companies cannot maintain level of liquidity assets. Their customers and vendors are not potential the their ratio of liabilities is remains always high with compare to their liquidity assets. Cost risk: Due to conflicts arises with Developed nation countries, cost of inventories of producing products is incurred at high level. Thus profitability rate of these industries goes down. Organisations shut down their business as they cannot bear expenses and cost of manufacturing these products.
Risk of brand value:Due to high compilations and war of America with other countries brand value of their gas and oil companies has been decrees. At present customer get attract with their rivalry industries. Satisfaction level of their customers gores down (Guesmi and Fattoum, 2014). Influence of oil prices volatility on economic growth of United States Volatility in prices of oil industries had been adversely impact on growth rate of American economy. Due to fluctuations in prices oil industries can not maintain their stability level in market area. Cost elasticity of demand is often called detrimental-that is prices rise by a certain amount for whatever variable input price increase, throughout this case, crude. The traditional economic theory, expressed in the concept of "price elasticity" of production, is that significantincreasesinoilpricesactuallyreduceoilproductionandreduceeconomic development. Fluctuations in prices of oil industry not only affect the particular industry but every sector of American economy had been adversely impacted due to changes in prices of oil industries. Every sector is related with each sector of economy, Fluctuation in oil and gas industries negatively impact on their complementary industries. In America profitability rate of crude oil industry are decrease and due to this prices of oil rise at high level and thus gas industries raise prices of their diesel and petrol due to rises in these products auto mobile sector also increase their price rates (Aloui, Nguyen and Njeh, 2012). This will negatively impact on American economy. Inflation rate of past year had been increase with high rate in America and this will also affect world economy scenario. Main causes of fluctuation in prices of oil are political instability. At present growth rate of America goes slow down. Government of America has now started various campaign for maintaining stability in oil manufacturing industries, but due to inter war conflicts among government parties and rigid polices of president Trump it takes times of positivity effect of these champaign. In America due to volatility of price inflation rate are increase and this will directly impact on services sector of America. Now banks of America charges high rate of interest from their customers. This will negatively impact on corporations as they could not grant loan from banks and unable to expend their business area (Pradhan, Arvin and Ghoshray, 2015). Few years ago America is known as leading country of the world but now due to their economical instability and lack of profitably level in oil industry Russia, China take their place. At present American economy is suffers from inflation rate as their profitability rate
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goes down. In 2010status of American oil industry has at their boom period, oil industries play essential part in American economy as their profitability high at that time and revenue arising from these industry has high ration then compare to other sectors.
RESEARCH METHODOLOGY The analysis approach is used primarily to collect the facts to make the efficient business choices (Cunado and de Gracia, 2014). This involves conversations, studies into journals, polls and many of the other analysis strategies. It research paper component comprises of both current and historical knowledge. This includes the specific information regarding the current processes of data gathering. Investigation type Method of research is related with the tools that are basically implemented to execute a specific research. These methods are implemented as per the requirement and purpose of research so that suitable fining can be gathered. Information involving attitudes, beliefs and feelings are gathered inQualitative methodof research.This helps to give a prosecutor a deeper understanding of the dynamic inequality and social experiences.Quantitative methodis another form of research method and using computational or quantitative methods, data is calculated in numerical terms. It is primarily designed to obtain the actual facts. In order to gain better knowledge about research topic quantitative method is used which is beneficial is making decision. Research approach This mainly related to the process which involves course of bigger assumptions in the context of gathered data, assessment and interpretation of the same to make key finding. The approach of research is primarily related to theory of particular research (Chen, Lee and Zeng, 2014). Inductive approach allows the researchers to establish hypothesis based on data analysis main findings. This relates to the creation of new hypothesis that arises from data. The deductive methodology ends with hypothesis but is centred on theoretical investigation. This establishes hypothesis depending on the current theory and creates an appropriate analysis approach for testing hypotheses. For more appropriate results deductive approach is used in respect to this research. Research philosophy It is linked to clarifying the premises about both existence and the credibility of the gathered source. The research is based on certain observations and about the manner that data is collected and analysed properly. Philosophy of interpretivism relates to knowing the difference
as those of the collective objects of societies. In this sense, methodological approach is useful in helping a researcher to perform less interviews an in-depth interview as well as market research interview.Deductiveapproachrepresentsnatureresearcher'sphilosophicalstance.Itis applicable to inquiry to produce current theories in terms of developing stronger hypotheses. In this research deductive approach is used which is beneficial is making most significant results. Data collection method Data gathering describes the process of gathering data and information across all available material in order to look for solutions to study questions and assess findings. Primary method basically states that for the very first time information is collected explicitly by researcher. Information may be obtained by direct contact or assessment via live interviews with both the participant and other audience (Ramos and Veiga, 2013). There have been various sources of key information gathering that are part of this method such as surveys, questionnaires etc. This approach is used in the making of common and suitable questionnaires which support in extracting understanding of candidates. On the other sideSecondary method is also atype of procedure, in which data is gathered through another person. The various data gathering outlets include books, posts, journals etc. Investigator uses the reputable sources to perform the literature analysis section. In order to determine the understanding of participant regarding oil price fluctuation primary method of collecting data is used in this particular research. Sampling This is regarded as a procedure which is basically implemented within the statistical examination within which random sample are selected from a large number of applicants and further decision are taken. Using the random numbers sampling process, the investigator chooses certain participants from the diverse population. It's a screening procedure which is impartial. It is a stronger screening tool because it offers the chosen participants equal chances. Researcher selects 35 candidates with the help of sampling method which are going to represent the understanding about oil price volatility. Ethical considerations Ethics is linked to the rules, principles and values that should be practices by each and every person or business. This is a researcher's duty to support research in a smarter way while observing certain ethical concerns. Researcher will make absolutely sure the participants ' data is
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kept secret. Therefore, it is the duty of the researcher to perform the investigation based on established standards and standards. This will enable investigator produce the best or the more real results of analysis (Ji and Fan, 2012).
DATA ANALYSIS AND INTERPRETATION This applies to the practice of using the analytical technique to demonstrate, as well as consistently describing the findings. It is focused on information review that is acquired through a study for the purpose of finishing work (Sadorsky, 2014). The relational approach is the foundation of this inquiry. Researcher makes use of the thematic context to view data or information. Separating details into different topics enables to undertake proper information review. Questionnaires Q1) Do you understand about the concept of oil price volatility? a) Yes b) No Q2) According to you, what is the main reason for oil price volatility? a)OPEC b) Supply and Demand Impact c) Natural Disasters and Politics conditions d) Production cost and storage also have impact Q3) According to you, supply and demand is main causes or reason oil prices volatility? a) Yes b) No Q4) What are the several risks faced by oil and gas companies in United States? a)Political wars b) Fluctuation in prices of oil and gas products c) Changes in legal policies d) Lack of liquidity assets e) Many other Q5) In which manner, oil prices volatility have impact on growth of economy in United States? a) Positive b) Negative c) Neutral Q6) According to you, what is the main influence of oil prices volatility over economic growth
of United States? a)Cost elasticity of demand b)Fluctuations in prices of oil industry c) Charges high rate of interest Q7) As per your opinion, fluctuations in prices of oil industry is main impact over growth of economy? a) Agree b) Disagree Q8) Provide any recommendations about the impact of oil prices volatility on overall economic growth. Data sheet Q1) Do you understand about the concept of oil price volatility?Frequency a) Yes22 b) No13 Q2) As per your point of view, what are the different causes of oil prices volatility?Frequency a) OPEC10 b) Supply and Demand Impact12 c) Natural Disasters and Politics conditions8 d) Production cost and storage also have impact5 Q3) According to you, supply and demand is main causes or reason oil prices volatility?Frequency a) Yes25 b) No10 Q4) What are the several risks faced by oil and gas companies in United States?Frequency a) Political wars6 b) Fluctuation in prices of oil and gas products10 c) Changes in legal policies7 d) Lack of liquidity assets9
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e) Many other3 Q5) In which manner, oil prices volatility have impact on growth of economy in United States?Frequency a) Positive18 b) Negative12 c) Neutral5 Q6) According to you, what is the main influence of oil prices volatility over economic growth of United States?Frequency a) Cost elasticity of demand10 b) Fluctuations in prices of oil industry16 c) Charges high rate of interest9 Q7) As per your opinion, fluctuations in prices of oil industry is main impact over growth of economy?Frequency a) Agree28 b) Disagree7 Q8) Provide any recommendations about the impact of oil prices volatility on overall economic growth Theme 1: Understanding of Oil price volatility Q1) Do you understand about the concept of oil price volatility?Frequency a) Yes22 b) No13 Mean17.5 Mode9
Median17.5 a) Yesb) No 0 5 10 15 20 25 22 13 Interpretation:From the table above it has been determined by the researcher that yes most of candidate selected for the investigation have the understanding about the topic of oil price volatility. The main reason for there brief knowledge about the specific concepts is due to regular news, articles as well as debates conducted by government in the context of oil price volatility. Theme 2: Different causes Q2) As per your point of view, what are the different causes of oil prices volatility?Frequency a) OPEC10 b) Supply and Demand Impact12 c) Natural Disasters and Politics conditions8 d) Production cost and storage also have impact5 Mean8.75 Mode0 Median9
a) OPEC b) Supply and Demand Impact c) Natural Disasters and Politics conditions d) Production cost and storage also have impact 0 2 4 6 8 10 12 14 10 12 8 5 Interpretation:The above graph is helpful for the researcher in determining the facts that there are number of factors due to which prices of oils keeps on fluctuating. It is also observed that impact of supply and demand of oil throughout the global market is the main reason due to which price keeps on changing time by time. Moreover the policies and standard formulated by OPEC also have a greater influence over the prices of oil (Naser, 2015). Theme 3: Main reason of oil price fluctuation Q3) According to you, supply and demand is main causes or reason oil prices volatility?Frequency a) Yes25 b) No10 Mean17.5 Mode5 Median17.5
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a) Yesb) No 0 5 10 15 20 25 30 25 10 Interpretation:From the above graph, it is easy to interpret by investigator that two economic elements Supply and demand one of the main due to which oil prices are keeps on fluctuating. As in case of stable economy the prices of oil does not fluctuate to much, but whenever economy is faces the downfall or recession than price of oil increasing in to make better situation. Theme 4: Main risk Q4) What are the several risks faced by oil and gas companies in United States?Frequency a) Political wars6 b) Fluctuation in prices of oil and gas products10 c) Changes in legal policies7 d) Lack of liquidity assets9 e) Many other3 Mean7 Mode0 Median7
a) Political wars b) Fluctuation in prices of oil and gas products c) Changes in legal policies d) Lack of liquidity assets e) Many other 0 2 4 6 8 10 12 6 10 7 9 3 Interpretation:The above graph, is helpful in determining the main risk which are faced by companies dealing in oil and gas industry throughout US. The sudden implementation of any legal policies, political wars, alteration in raw material cost are the main elements which lead to uneven movement in the prices of oil. This unwanted movement causes tough situation for the business firms to deal with the same and thus lead to slower productivity and also impact their profitability. Theme 5: Impact on growth Q5) In which manner, oil prices volatility have impact on growth of economy in United States?Frequency a) Positive18 b) Negative12 c) Neutral5 Mean11.6666666667 Mode3 Median12
a) Positiveb) Negativec) Neutral 0 2 4 6 8 10 12 14 16 18 20 18 12 5 Interpretation:on the basis of above graph it is clearly identified by the researcher that movement in prices of oil throughout a year have a positive impact over the economic condition of united state. Such as increase in price of oil and gas also increase the burden on buyer but as the oil is essential for every household so they have to purchase the same at higher prices. The increase movement or flow of money resources in the economy influence a positive result and thus overall economical conditions of world also increases. Theme 6: Main influence Q6) According to you, what is the main influence of oil prices volatility over economic growth of United States?Frequency a) Cost elasticity of demand10 b) Fluctuations in prices of oil industry16 c) Charges high rate of interest9 Mean11.6666666667 Mode1 Median10
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a) Cost elasticity of demand b) Fluctuations in prices of oil industry c) Charges high rate of interest 0 2 4 6 8 10 12 14 16 18 10 16 9 Interpretation:In the opinion of researcher, it has been observed that main influence of oil prices volatility over economic growth of United States is due to several reasons. Likewise, Cost elasticity of demand, Fluctuations in prices of oil industry and Charges high rate of interest. It is also observed that most of the candidates i.e 16 have a faith that due to over movement in the prices of oil throughout a year have a impact over financial and economical condition of US. Theme 7: Main influence Q7) As per your opinion, fluctuations in prices of oil industry is main impact over growth of economy?Frequency a) Agree28 b) Disagree7 Mean17.5 Mode0 Median17.5
a) Agreeb) Disagree 0 5 10 15 20 25 3028 7 Interpretation:From the above graph, it is easily defined by the researcher that yes almost 28 candidates selected for the survey are agree with the statements that due to alteration in oil prices the economic conditions also fluctuate. There are several reason because of which oil price keeps on changing and lead to several issues which could both increase as well as decreases the profitability of entire world economy.
RECOMMENDATIONS Recommendation From the above all analysis it has been determined that proper steps must be made by companies dealing in oil industry to meet the oil price volatility with US to have a stable economic condition and reach the highest level of satisfactory. The most successful solution to fluctuations in oil prices is enabling economies to work. Government controls and legislation hinder the efficiency of the economy as it reacts to increases in oil prices. However, efforts to decrease our dependency on oil by helping to fund renewable sources or by generating excess taxpayer dollars on fuel quality requirements will do nothing to minimize reliance on oil. Producers and customers are sensitive to market increases as they share knowledge regarding these adjustments. As oil rates rise, miners are searching and digging for more (Aloui, Aïssa and Nguyen, 2013). The United States will capitalize on the reality that, given the complexities of global cooperation, suppliers and customers have a shared interest in minimizing market uncertainty and explore areas of agreement towards more concrete collaboration, like increased logistical efficiency and strategic supply-sharing arrangements. Policymakers will concentrate on two aspects of their reactions: measures to mitigate unbearable uncertainty and measures to help customers deal with the effects of all that continues. So, a fuel tax will be, maybe as part of a robust fiscal plan, but the chances appear distant. Seeking customers have exposure to hedging options basically, seeking to globalize oil futures rather than attempting to close them down might also help them deal more with price manipulations. Reflection The framework needed an awareness of oil price volatility especially its impact over the economicconditionofdifferentdevelopedcountriessuchasUS.Therearenumberof advantages and disadvantages of sudden and planned movement in the prices of oil like many time prices are increased to make economy stable and some time to reduce the consumption for future saving. I was very excited about the research because it provided me the ability to grasp correctly and efficiently knowledge related to the factors making movement in oil prices as well as impact of this fluctuation on economy growth. The elements which are prevailing all through the oil industry are needed to be looked by the companies dealing in respective sector so that they can handle situation of price fluctuation and succeed to the desired results. In addition, as I
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advanced through the tutorial, through qualitative study, I acquired information on some primary aspects relevant to the same.
CONCLUSION In the end of this report, it is concluded that movement in the prices of oil can lead to some major transformation in both negative as well as positive way. The aim of this paper is to examine whether shifts in the oil price could explain global economic development. Researcher is also researching whether there are any variations in price of oil impacts on economic activity between nations, with a emphasis on the nations and community of countries chosen. Oil markets must undoubtedly have significant and predictable price swings, which have to be recognized as a normal part of life. It would only be futile to try to aggressively manipulate markets in a lenient reaction to any surprise, such as by manual market caps, trade bans or restrictions, or informal launches of government storage facilities. Final studies it seems that there is no direct connection between the price of oil and global economic development. It is noticed that the rise in price of oil did not affect the rise in economic development for the oil producer countries. In reality, the capital flows of funds to oil exporters have made their way beyond these nations after a rise in the cost of oil and therefore do not function economically. To tackle and maintain these complexities, the United States must develop an efficient and appropriate regulatory system, optimizing the advantages and reducing costs.
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