Chapter 11 - Article #1 Flashcards
What is one of the biggest factors affecting crude oil demand?
A) The discovery of new oil reserves
B) Economic growth
C) Advances in renewable energy
D) Changes in agricultural practices
B) Economic growth
What percentage of total world energy consumption comes from petroleum products?
A) About one-third
B) About half
C) About two-thirds
D) Nearly 90%
A) About one-third
Why does the transportation sector heavily depend on petroleum products?
A) It has the highest energy density compared to alternatives.
B) Renewable fuels are not available for transportation.
C) Petroleum is the only energy source for cooking and heating.
D) Governments mandate petroleum use in all transportation systems.
A) It has the highest energy density compared to alternatives.
What role does OPEC play in the oil market?
A) It regulates global oil prices by directly controlling demand.
B) It sets production targets for its member countries.
C) It mandates the use of renewable energy by its members.
D) It controls oil futures contracts worldwide.
B) It sets production targets for its member countries.
As of 2021, what percentage of the world’s proved crude oil reserves was controlled by OPEC members?
A) About 50%
B) About 60%
C) About 72%
D) About 90%
C) About 72%
What is “spare capacity” as defined by the U.S. Energy Information Administration (EIA)?
A) Oil reserves that can be accessed within one year.
B) The volume of oil production that can be brought online within 30 days and sustained for at least 90 days.
C) The maximum oil production capacity a country can achieve under optimal conditions.
D) The unused portion of a country’s oil export capacity.
B) The volume of oil production that can be brought online within 30 days and sustained for at least 90 days.
Which geopolitical event led to the first major oil price shock in 1973-74?
A) The Persian Gulf War
B) The Arab Oil Embargo
C) The Iranian Revolution
D) The Iran-Iraq War
B) The Arab Oil Embargo
How do hurricanes in the Gulf of Mexico typically affect oil prices?
A) They decrease prices by increasing oil production.
B) They increase prices by disrupting oil production and refinery operations.
C) They stabilize prices by reducing global oil demand.
D) They have no measurable impact on oil prices.
B) They increase prices by disrupting oil production and refinery operations.
What is a major reason for oil price volatility during geopolitical disruptions?
A) High responsiveness of supply and demand to price changes.
B) Inelasticity of supply and demand in the short term.
C) Increased production capacity of non-OPEC countries.
D) Rapid development of alternative energy sources.
B) Inelasticity of supply and demand in the short term.
What is a futures contract in the oil market?
A) An agreement to buy or sell oil at the current market price for immediate delivery.
B) A contract to buy or sell oil at a standardized quality and price on a specific future date.
C) A government-regulated document that determines oil production quotas.
D) A fixed agreement to control global oil prices.
B) A contract to buy or sell oil at a standardized quality and price on a specific future date.
What signal does rising oil prices in spot markets send to producers?
A) There is too much supply relative to demand.
B) Additional supply is needed to meet demand.
C) Demand for petroleum products is decreasing.
D) Alternative energy sources are becoming more viable.
B) Additional supply is needed to meet demand.
Why do market participants monitor crude oil spare capacity?
A) It ensures oil producers meet international environmental standards.
B) It indicates the world oil market’s ability to respond to supply disruptions.
C) It determines the long-term sustainability of oil production.
D) It reflects the profitability of non-OPEC oil producers.
B) It indicates the world oil market’s ability to respond to supply disruptions.
