Final MGMT 1035: Week 11

Question 1

What is gasoline?

Answer 1

Gasoline is a byproduct of the refining of oil into kerosene

Question 1

In 1953 The C.I.A. and British Intelligence organized the overthrowing of what countries government?

Answer 1

Iran.

Question 2

In Canada the original oil industry was created in what region?

Answer 2

Southwestern Ontario

Question 3

The U.S. Energy Information Administration (EIA) defines spare capacity as…

Answer 3

The volume of oil production that can be brought online within 30 days and sustained for at least 90 days.

Question 4

The oil embargo of the mid 1970s was sparked by what international event?

Answer 4

The Yom Kippur War.

Question 5

In 2022 which country had the highest total oil reserves?

Answer 5

Venezuala.

Question 6

Willian Knox Darcy developed British Petroleum to exploit the oil resources of what country?

Answer 6

persia

Question 7

What does a spot transaction in crude oil refer to?

Answer 7

On the spot purchase of a single shipment

Question 8

“Upstream” Oil and Gas companies…

Answer 8

identify, extract, or produce raw materials.

Question 9

Who brought commercial production to Germany

Answer 9

1880s Carl Benz

Question 10

Carl and Bertha Benz

Answer 10

built wagon, coaches, and developed the first internal combustion engine vehicle

Question 11

William Knox Darcy,

Answer 11

o Wanted a monopoly for the extraction on sale of oil in Middle East
o Founded what became British Petroleum
o Got a monopoly by the British

Question 12

Whose the founder of Standard Oil?

Answer 12

John D. Rockefeller

Question 13

Which government breaks up Standard Oil, due to its success?

Answer 13

American Gov.
under the Sherman Antitrust Act of 1890

Question 14

Henry Ford’s Model T

Answer 14

o Becomes best-selling car in the world
o Borrowing ideas from the scientific management theory
o Dedicated assembly line  building cars quickly and prices drop

Question 15

Why did Iran resent Western oil companies after World War II?

Answer 15

paying low royalties to the Iranian government. Mossadeq sought to increase royalties

Question 16

OPEC

Answer 16

The Organization of Petroleum Exporting Countries
want more control over oil and want to control the world price and access of this product

Question 17

Cartel

Answer 17

limits access to a product

Question 18

A branch of Rockefeller’s Standard Oil?

Answer 18

Imperial Oil

Question 19

When was the oil embargo launched by OPEC?

Answer 19

1973

Question 20

Which gov. made Petro Canada a government entity?

Answer 20

Pierre Trudeau

Question 21

Which government sold Petro Canada?

Answer 21

50% sold off by the Mulroney conservative party and the rest by the Paul Martine Liberal party

Petro Canada was not cheaper than the American owned ones

Question 22

Petro Canada Facts

Answer 22

o started as a Crown Corporation during the economic crisis in 1960s
o was to be a “window on the industry”
o eventually privatized

Question 23

What accounts for about one-third of total world energy consumption?

Answer 23

Petroleum

Question 24

Factors Influencing Oil Prices

Answer 24

1. OPEC Compliance
2. Consumer Responsiveness
3. Competitiveness of Non-OPEC Producers
4. OPEC vs. Non-OPEC Efficiency

Question 25

How does Spare capacity acts as a buffer against supply disruptions?

Answer 25

helping stabilize prices

Question 26

Price Volatility

Answer 26

Requires significant price adjustments to rebalance supply and demand due to this inelasticity

Question 27

What is Brent oil, and why is it a benchmark?

Answer 27

Light, sweet oil from North Sea Europe; easy transport; low tanker costs.

Question 28

What impacts Alberta’s oil royalties?

Answer 28

Oil price, production/transport costs; low quality, long transport; better pipelines reduce discounts.

Question 29

Why does Alberta’s oil sell fro less than Brent and WTI?

Answer 29

• lower quality of Alberta’s oil
• distance from key refining markets, which increases transportation costs
• Improving market access

Question 30

Upstream

Answer 30

Involves identification, extraction, and production of raw petroleum materials

Question 31

Midstream

Answer 31

o Focuses on transportation and storage of crude oil and refined products.
o Connects upstream and downstream operations

Question 32

Downstream

Answer 32

o Post-production processes, such as refining crude oil and natural gas.
o Includes the creation of consumer products like gasoline, diesel, and plastics

Question 33

Leading countries in Oil Reserve (2022 data):

Answer 33

• Venezuela: 303.8 billion barrels.
• Saudi Arabia: 297.5 billion barrels.
• Canada: 168.1 billion barrels.

Question 34

Extraction Methods

Answer 34

o Developmental drilling: Tapping known reserves.
o Exploratory drilling: Searching for new reserves.
o Directional drilling: Vertical drilling to target oil sources.

Question 35

Petroleum Formation

Answer 35

o Fossil fuel created from dead organisms (e.g., algae, plants, bacteria).
o Subjected to high heat and pressure inside rock formations over millions of years.
non-renewable

Question 36

Classifications of Petroleum

Answer 36

Unrefined Classes:
o Asphalt, bitumen, crude oil, and natural gas.
Refined Uses:
o Gasoline, kerosene, plastics, and other byproducts

Question 37

OPEC Creation

Answer 37

Established at a conference in Baghdad, Iraq, from September 10–14, 1960

Question 38

Founded Members of OPEC

Answer 38

Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela

Question 39

OPEC’s Purpose

Answer 39

o Stabilize the global oil market.
o Coordinate energy policies among members.
o Ensure fair oil prices and a steady supply to the market

Question 40

What happened in the 1950s oil market?

Answer 40

Soviet oil production increased, leading to price cuts by “The Seven Sisters” (Esso, Mobil, Standard, Gulf, Texaco, BP, CFP). Arab nations sought price stabilization

Question 41

What was the significance of the Declaratory Statement (1968)?

Answer 41

Asserted sovereignty over natural resources; supported decolonization and national enrichment.

Question 42

What challenges did early oil-producing nations face in cooperation?

Answer 42

Struggles with export limits (1962) and political tensions like the Six-Day War (1967).

Question 43

What triggered the 1973 oil embargo?

Answer 43

U.S. support for Israel during the Yom Kippur War. Arab OPEC members embargoed oil to the U.S., Canada, UK, Japan, and the Netherlands.

Question 44

What were the results of the 1973 oil embargo?

Answer 44

Supply disruptions, sharp price increases, and economic shifts in global power.

Question 45

What challenges did OPEC face in the 1970s?

Answer 45

No monopoly (56% market share) and reliance on Western companies for refining and downstream activities.

Question 46

Iran-Iraq War (1980–1988

Answer 46

Restricted Iranian oil production; other OPEC members compensated.
oil prices rose significantly

Question 47

What was the impact of Iraq’s invasion of Kuwait in 1990?

Answer 47

Disrupted oil supply; Saudi Arabia increased production to compensate

Question 48

What is OPEC’s role in the global oil market?

Answer 48

Pivotal in shaping the oil market; influence fluctuates with geopolitical and technological changes.

Question 49

What global conflicts affected OPEC’s oil supply?

Answer 49

Wars in Libya, Nigeria, Iraq, and Syria caused intermittent supply disruptions

Question 50

How much barrels did OPEC attempt to restrict?

Answer 50

17.5 million barrels/day to stabilize prices

Question 51

West Texas Intermediate (WTI)

Answer 51

• Represents oil produced in the U.S., centered around Cushing, Oklahoma.
• Although also a light oil, WTI is typically priced lower than Brent due to:
• U.S. export restrictions on crude oil.