Topic 9.4 - Oil Supply And Demand Flashcards
What are oil reserves?
Oil reserves are the amount of recoverable oil - oil that can be extracted using today’s technology
What factors affect oil production?
Infrastructure, domestic demand, shrinking reserves
What is oil production?
The process of extracting and refining crude oil
How does infrastructure affect oil production?
In order to produce oil, a country needs the right equipment and technology
How does domestic demands and shrinking reserves affect oil production?
Domestic demand - Saudi Arabia relies on oil to meet its own energy needs
Shrinking reserves - Oil production from North Sea reserves is shrinking as they are being used up
Why does oil consumption increase as countries develop?
- As GDP/ capita increases so does oil consumption as people in wealthier countries have more energy-intensive goods e.g. cars
- Rapid industrialisation in emerging economies e.g. China also increases consumption.
- Growing population, boom in industry and expansion of cities leads to higher consumption
About he much oil is used to fuel vehicles?
Around 65% of oil
How are oil supply and prices linked?
They are closely linked. Generally periods of oversupply cause them to fall and undersupply to increase
What factors can cause oil price/demand to fluctuate? (Not increase/decrease - fluctuate)
Conflicts, diplomatic relations, recessions, economic booms
How do recessions and economic booms cause fluctuation oil prices?
Recessions - demand for oil lowered as industrial activities and economic growth slows so price falls
Economic booms - periods of rapid economic growth lead to increased consumption and demand so increased prices
Why do conflicts cause oil prices to fluctuate?
They can disrupt oil production leading to a shortage in supply so prices increase
How can diplomatic relations cause oil prices to fluctuate?
Tensions between oil-producing countries can cause oil prices to increase
