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OIL PRICE ANALYSIS

OIL PRICE ANALYSIS. Zdenek Riha; Viktorie Jirova; Marek Honcu Czech Technical University Faculty of Transportation Sciences Development, Energy, Environment, Economics (DEEE ´11) Tenerife, December 2011. Prezentation Structure. History of oil and their prices

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OIL PRICE ANALYSIS

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  1. OIL PRICE ANALYSIS Zdenek Riha; Viktorie Jirova; Marek Honcu Czech Technical University Faculty of Transportation Sciences Development, Energy, Environment, Economics (DEEE ´11) Tenerife, December 2011

  2. Prezentation Structure • History of oil and their prices • Quantifiable factors and oil prices • Another reasons of oil prices changes • Impacts of oil prices for economic and using of alternative fuels • Conclusions

  3. NEWSPAPER IN 2009 „The world prices of oil decreased yesterday for more than one dollar and American oil were decreased to 35 dollars per barel. Main reasons were fast solution of Russia – Ukraine gas conflict and truce in region Gaza. The price of American light oil was lower about 1,30 dollar to aproximately 35,20 dollars per barell.“ … short news from 2009 The price follows from relation between supply and demand • But question is: … what are main factors, which influence supply and demand for oil?

  4. HISTORY OF OIL • The oil was known by people for hundreds years (inhabitants in old Syria used oil as ingridient in building industries) • Oil was used as compensation of whale fat and row material for lithning since half of 19th century • Since moment of oil using in means of transport the importance of oil increased: we can speak about change from natural resource to economic resource • Big quantity of energy in small capacity is the main advantage of oil.

  5. HISTORY OF OIL PRICES Oil as economic resources – from beginning of the 20th century (Henry Ford) Oil crises: 1973, 1979, 1991, 2008

  6. THE OIL PRICE AND QUANTIFIABLE FACTORS - one of basic reason for growth of oil price in 2008 • there is no large influence on fuel prices (different between 2008 and 2011) • in Czech Republic: 2008 – fuel price: about 30 crowns per litre 2011 – fuel price: about 35 crowns per litre

  7. RELATION BETWEEN GDP AND OIL PRICES In the graph we can see the relation between oil prices and GDP G7 countries (USA, Great Britain, France, Germany, Japan, Italy, Canada) But important is also increasing demand in countries as China or India

  8. WHAT HAPPENED IN YEAR 2008? We can define next basic reasons for changes of oil prices: • SPECULATION - when the stock market does not flourish (mortgage crisis), investors turn to less hazardous assets as commodities like oil – it is case 2008

  9. PRICES OF COMODITIES IN 2008 CORN, WHEAT, RAPE, GAS

  10. WHAT HAPPENED IN YEAR 2008? We can define next basic reasons for changes of oil prices: • SPECULATION - when the stock market does not flourish (mortgage crisis), investors turn to less hazardous assets as commodities like oil – it is case 2008 • OIL PRODUCTION COSTS - stroken oil is hardly available and so necessarily the costs of its extraction have been growing • POLITIC STABILITY - above all in countries producing and exporting oil • ECOLOGICAL AND OTHER CATASTROFS - 11 th September 2001 and monetary politic in USA • OIL RESERVES???

  11. IMPACTS OF OIL PRICES ON ECONOMICS • The fuel prices (depending on oil prices) are the most important part of costs in every transport • There could be big influence on macroeconomical factors – inflation or unemployment • From the longterm perspective oil prices will be the most important factor for implementation of alternative sources in transport

  12. PROBLEM ALTERNATIVE SOURCES IN TRANSPORTATION • Four groups of problems: • Economic - Technological • Energetic - Environmental INDICATOR: Energy Return on Energy Invested • In beginning of oil production 100 • About 1930 60 • Oil in Near East 30 • Another oil 10 – 35 • Oil from oil sand 3

  13. CONCLUSIONS Oil and its price is the key parameter of the development of an economy. Through influencing the price of transport it has also effect on the inflation and everyday life. Drastic growth of oil prices in 2008 was caused by decrease of the American dollar and speculations at commodity markets and growth of demand in China. It is no easy to predict oil prices – there are factors, which are very hard to anticipate Oil prices should be the main factor for decision about using of alternative fuels in transport (no state support and dotation).

  14. ACKNOWLEDGEMENT This paper originated as a part of a CTU in Prague, Faculty of Transportation Sciences research project on Design and Operation Networks Optimisation Methods Development (MSM: 6840770043), financed by the Ministry of Education, Youth and Sports of CR

  15. Thanks for your attention,Zdenek Riha, Czech Technical University in Prague;rihazden@fd.cvut.cz

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