Tighter+Oil+Supply+in+2012? by+Patrick

//**REMEMBER: DO NOT SUMMARIZE THE ARTICLE!!!**//

=TITLE OF EXTRACT:=

Tighter Oil Supply in 2012?
=SOURCE:= http://oil-price.net/en/articles/tighter-oil-supply-in-2012.php

=DATE EXTRACT WAS WRITTEN:= 2011/08/01

=DATE CURRENT EVENT WAS WRITTEN:= 2012/02/22

=EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE:= A recent report shows that oil supplies would become extremely tight in 2012, so analysts say that oil prices could go even higher as spare production capacity and inventories are "effectively exhausted." Although some people say that they can raise the Saudi Arabia oil production, it seems to be unlikely that this is possible. The key concept here is that when the supply of oil is low, the price of oil would be high.

=VOCABULARY TERMS AND DEFINITIONS:=
 * Supply - the number of goods a supplier is willing and able to provide
 * Demand - the number of goods that the consumer is willing and able to buy
 * Producers - also known as the suppliers; people who supply stuff
 * Scarcity - the imbalance between the unlimited wants of a person and the actual number provided
 * GDP Growth - economic growth is the increase of per capita gross domestic product (GDP) or other measure of aggregate income.
 * Production Quota - a production quota is a goal for the production of a good; A limit on the amount of a good produced

=DIAGRAMS:=

=EVALUATION:= It is stated in the article that oil supply will drastically decrease in 2012. The IEA, Internal Energy Agency, announces the release of strategic oil reserves in the market. This has only been done in the past when there is a war, which shows how severe this problem is right now. Some may suggest to increase the oil supply from countries like Saudi Arabia, but unfortunately, that cannot be done for many reasons. Because Saudi Arabia is not able to raise the amount of supplies provided to the society, the price of oil raises. When there is a shortage of a product or service, the prices will rise due to the market equilibrium. This can be seen clearly in the diagram above. According to the article, the prices of a barrel of oil hit $101.08 in February 2011, which is the highest price it has ever been since October 2008. This can be bad to the society because it means that many people will have to pay more for the same amount of oil they had before, and it also means that we will run out of oil soon. To be honest, I think the first thing to do is to produce more oil, maybe not from Saudi Arabia. There are large reserves of oil in Russia as well, so in that case, Russia can put the oil in the market and be a big supplier. The next thing to do is to limit the oil usage of oil everywhere around the world; a limitation should be set so that people will not create a bigger shortage to the society.