Energy+Agency+Sees+Slowdown+in+Oil+Demand

**Title of Article:** Energy Agency Sees Slowdown in Oil Demand **Source:** [] **Date of Article:** May 12, 2011  **Summary:** The article is basically saying that the global demand for crude oil is expected to decrease “as a result of the recent surge in petroleum prices and weakening growth prospects for industrialized countries”. In the United States, gasoline prices rose to almost $4 a gallon while in France, prices have surpassed to more than $8 a gallon. Demand for oil products in Europe have already sank 4.1 percent because of a weak demand for heating oil due to its high prices. The demand curve is inversely proportional, meaning that when the price of a particular good or service increases, the demand will decrease. As seen in Graph A, when the price of crude oil increases from P1 to P2, the quantity demanded decreases from Q1 to Q2.  **Vocabulary:** __Supply:__ Quantities of goods and services that sellers are willing to offer at various prices at a given time and place. __Demand:__ The desire of purchasers, consumers, clients, or employers, etc., for a particular commodity, service, or other item. __Inflation:__ Demand for goods is rising faster than companies can produce. __Consumer:__ A person or organization that uses a commodity or service. __Market:__ A market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures where by persons trade, and goods and services are exchanged, forming part of the economy. It is an arrangement that allows buyers and sellers to exchange things. __Commodity:__ A commodity is some good for which there is demand, but which is supplied without qualitative differentiation across a market. __Economy:__ The study of how to allocate limited resources amongst unlimited wants. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;">__Positive statement__: A statement that can be proven by statistics or some sort of data/evidence. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;">__Macroeconomics:__ The study of economics of a nation as a whole. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;">__Scarcity:__ The fundamental economic problem of having seemingly unlimited human needs and wants, in a world of limited resources. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;"> <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;">**Graph:** <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;"> <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;"> <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;"> <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;"> <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;">**Conclusion and Evaluation:** <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;">With the global rise in crude oil prices being a major factor contributing to the slow economic growth and recovery for many countries, I think that the governments of the individual countries should operate a buffer stock scheme to intervene and keep the oil prices within its acceptable price band. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;"> <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;">As seen from Graph B above, the government sets a price band with a highest possible price and a lowest possible price. It then intervenes in the market whenever the free market forces the price of wheat either above the top price or below the bottom price. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;"> <span style="font-family: Arial,Helvetica,sans-serif; font-size: 110%;">From my points explained above, I believe that a buffer stock scheme would be the best solution to the rapid increase in crude oil prices. However, there are some problems associated with this method as well. It is only plausible to use this method if the government can find the proper place (right temperature, moisture, atmosphere, etc) to store the surplus oil beforehand.