TOPIC Oil Price Increasing that rocked the business world Background Recently World faces a big Oil crisis in 2011. This Oil crisis occurred because of Libya, Saudi Arabia, Kuwait, Nigeria and some other countries, At that time these countries reduce their oil supply and world faces oil crisis. The global oil demand in 2011 was 89.1 mb/d. and the supply of oil was 88.5 mb/d. the sortage of supply was 0.6 mb/d. So that oil price become increase at that time. The USA, Europe, Asia Pasific and Middle east countries are great victim to it. World Oil Demand Global economic growth is 3.8% in 2011 and 5.2% in 2010. Having risen to 89.1 mb/d in 2011, global oil consumption is forecast to rise by 0.8 mb/d (0.9%) in 2012, to 89.9 mb/d. Global Oil Demand (2010-12) (Million barrels per day) 2010 2011 2012 Africa 3.4 3.3 3.5 Americas 30.1 30.0 30.0 Asia/Pasific 27.3 28.1 28.7 Europe 15.3 15.0 14.6 FSU 4.5 4.7 4.8 Middle East 7.8 8.0 8.2 World 88.3 89.1 89.9 Annual chg(%) 3.2 0.3 0.9 Annual chg(mb/d) 2.8 0.3 0.8 Changes from last OMR(mb/d) 0.00 0.19 0.01 World Oil Supply Global oil supply fell by 0.2 mb/d to 90.4 mb/d in February, with rising OPEC NGL and crude production only partially offsetting a 0.5 mb/d decline from non‐OPEC countries. Compared to a year ago, global oil production stood 1.7 mb/d higher, 90% of which stemmed from increasing output of OPEC crude and NGLs. All world oil supply figures for February discussed in this Presentation are IEA estimates. Estimates for OPEC countries, some US states, ad Russia are supported by preliminary February supply data. Global Oil Supply (2010-12) (Million barrels per day) 2010 2011 2012 OECD Supply North America* 14.1 14.6 15.1 Europe 4.1 3.8 3.7 Asia/Pasific 0.6 0.5 0.6 Total OCED 18.9 18.9 19.4 Non-OCED Supply FSU 13.5 13.6 13.8 Europe 0.1 0.1 0.1 China 4.1 4.1 4.2 Other Asia 3.7 3.6 3.5 Latin America 4.1 4.2 4.4 Middle East 1.7 1.7 1.5 Africa 2.5 2.5 2.3 Total non OCED 29.8 29.8 29.9 Total OPEC 52.6 52.7 Total Supply 87.3 88.5 World Oil Prices Oil futures prices moved higher in tandem with escalating supply side risks to the market in February and early March. Geopolitical problems in Syria, South Sudan and Yemen have led to protracted supply disruptions from those countries, removing from the market more than 600 kb/d in 1Q this year. The prospect of additional production outages relating to Iran have added yet more uncertainty for the supply outlook in the coming months. Futures prices for Brent were last trading around $125/bbl and WTI at $106/bbl. The Causes For this Incident • The rise in demand of oil in both China and India has changed the oil demand scene in the global market. The Govt. of these countries has to cope with this change in social and economic status. • The devastating hurricanes which occurred in the Gulf of Mexico last year had long term effect in the oil production. There has been a production loss of 30 percent (More than 10 percent is still down) • Libya war is another Causes for oil price increasing. • Weak dollar is one of the main reasons for increase in oil price according to some analyst as weaker dollar makes oil less expensive compared to other currencies • Reduce Oil supply by the Countries Benefited for increasing oil prices? 1. Some Sectors Thrive It probably counts as obvious that there are sectors that thrive when oil prices march upward. High prices for oil fuel the same sort of process as in any other sector; suppliers look for ways to provide more of the product and take advantage of those higher prices. 2. New Technologies Become Viable Cheap oil is problematic for companies and industries looking to supplant oil. While most people can agree that there are vague and nebulous costs associated with accessing and utilizing oil (pollution, for starters), the United States has been reticent to translate those costs into higher energy taxes. It is not clear that higher taxes on fossil fuels in Europe and much of Asia really do anything to mitigate environmental damage beyond reducing consumption. All in all, then, when oil prices are low it is very hard for cleaner energy technologies to compete effectively on price. Benefited for increasing oil prices? 3. Changes in Behavior For those who believe that burning oil (and other hydrocarbons) is generally a bad thing, higher prices that lead to lower use has to be counted as a benefit. When people are faced with higher prices and no obvious substitutes, they will consume less assuming that their demand is relatively elastic. 4. Alternatives Come to the Fore If increased exploration and production is a normal byproduct of higher oil prices, so too is substitution. When Nazi Germany faced oil shortages in World War II, methods of producing oil, diesel and gasoline substitutes from vegetable oils, animal fats and coal were thoroughly explored. otherwise, the oil crisis of the 1970s gave the development of ethanol in Brazil a major boost. NOT Benefited for increasing oil prices? Basically the whole world is not benefited for this incident. The developing & less developing countries are the great victim to it. Not only these but also USA, Europe, Russia, Asia, middle east countries fall in big trabble because of this incident. The Effect of World Business For This Incident 1. Different kinds of industries react differently to high oil prices, but usually negatively. 2. Oil Price Effects to Transportation 3. Oil Price Effects to Outsourcing and Manufacturing 4. Oil and Other Energy Costs 5. Increasing Exchange Rates 6. High oil prices increase transportation costs and with a certain level, global trade might get stuck 7. Company growth contributing investments are often preferred against energy efficiency investments, which have generally low risk and good rate of returns. The Future Perspective……… we have a maximum of 50 years worth of petroleum reserves left. That means that in the next five decades our lives may change dramatically. We will no longer have one of the most important resources responsible for the industrialization and modernization of our global society. We have relied on it to run our ships and airplanes, heat our homes, fuel our cars, carpet our floors, clothe our bodies, brush our teeth, and wax our surfboards. In short, thousands of industrial, domestic, and recreational petroleum applications may not be possible in the coming century. Now that we are dependent on this finite resource in every realm of life, we may soon have to relinquish it. to be Continue.. The Future Perspective……… What should we do in future without oil……. We should try to find out the alternate solution of it. Like. 1. Use solar power 2. Floating wind turbine 3. Bio fuel 4. Bio gas 5. Energy saving equipment 6. Renewable Energy etc. 7. Deep lake water cooling system Picture Of Oil Plant Any Query……..