Current Event:
Recently oil prices fell 3.2% as there was an increase in the amount of crude oil available within the past week. This was something most people weren't expecting in the future due to the speculation of definite supplies of crude oil extraction in the earth's surface. Because of this supply change, the price of oil per barrel has fallen $2.97 on the New York Mercantile Exchange. The Energy Department attributes this increase in supply due to the increase in the amount of imports excluding governmental oil stockpiles.
So does this increase in supply of oil really reflect the actual amount of oil still available on the planet? Just because the United States is importing more doesn't necessarily mean that the supply of actual oil for the world is increasing, just the amount of oil the United States has in its possession. Phil Flynn, an oil analyst at PFG inventories reported that crude inventories are still down 9.7% since May of 2011. "All week, the price of front-month Nymex futures have traded higher than later-month contracts, a phenomenon that typically signals worries about a near-term supply crunch," the Wall Street Journal article "Crude Oil Slides Nearly $3" reports. This could be worrying, however gasoline demand has miraculously decreased 1.1% last week to its lowest level in 13 years due to the recession. So as a country and a consumer, should we still be worrying about the supply of oil left on this planet? As soon as the recession clears, demand is likely to increase, further eliminating this limited resource we all rely on so heavily.
Resources:
http://online.wsj.com/article/SB10001424052970203687504576654993011920346.html
This is such an interesting article/point because as I was working on the finance lab I came across something that has been bugging me about the whole industry: Is green energy as big as it seems and is oil really declining? From the information we've gathered as a group, I haven't been able to draw a conclusion. There have been no major breakthroughs in green energy lately and the amount of people who actually buy electric cars or use green energy is less than projected. Oil companies are doing great and turning a profit still so it's curious as to whether 1) we need green energy as much as we think we do and 2) the oil industry is actually declining. It's definitely something to keep an eye on.
ReplyDeleteYes. Actually, I think as the technology is being developed, more and more oi and natural gas would be found. Meanwhile, although the technology of using green energy has not been widely used, it is definitely the future trend in the energy industry, which must be considered in the long term investment.
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