The effects of supply and demand in petroleum economics
Petroleum is a liquid found below the surface of the earth that occurs naturally. Crude oil that has not been processed can be referred to as petroleum. When crude oil is processed, the outcome of the products is called petroleum products. Therefore, in most cases, petroleum occurs as a mineral and is obtain through a process oil drilling.
Petroleum’s importance range from a wide range of uses to a strongly based economic stronghold. Refining of petroleum is done in established companies in the mining country. In addition, petroleum refining companies may be privately own or own by the state. Petroleum is in most cases an important export commodity. Hence, the countries producing petroleum enjoy considerable benefits from the foreign exchange. Apart from the consumption of petroleum as a fuel, processed oil proves beneficial in the production of a variety of consumer products. The products range from gasoline, kerosene. Processed oil is also a raw material in the manufacture of plastics and pharmacy products.
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In conclusion, political concerns have influenced the supply and demand for petroleum and its products. The resolution of a country to go to war with another country leads to increased demand for petrol as a fuel and source of energy in the manufacturing industry. Thus, more weaponries will need to be create in grounding for the war.
Cashin, Paul. The Differential Effects of Oil Demand and Supply Shocks on the Global Economy. Washington: International Monetary Fund, 2012. Print.
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