Oil Prices

Topics: Petroleum, OPEC, Natural gas Pages: 7 (1242 words) Published: June 4, 2014

May 11, 2014
WR 121
Dr. Jennifer Hoofard
Oil Prices and Their Impacts on the United States
Across the world, everyone uses some form of a petroleum product in his or her daily lives. The United States uses about 3.5 gallons of oil per person per day. With 318.1 million people that is about 1.1 billion gallons of oil per day used in the United States in some way. However, what does all this oil cost the United States? Can the government regulate the cost? Some of the most common petroleum products used in the United States are: gasoline, diesel, basketballs (rubber), shoe polish, and many more. There are approximately 6000 products made with petroleum. An industry in the US that is nearly purely powered by oil and gas is shipping, whether by car, truck, rail, sea, or air. Whether across the street or from LA to New York, just about everything gets put on a truck or train and taken from point A to point B. CSX (a major freight train service serving the eastern United States) claims they can move 1 ton of freight nearly 450 miles on one gallon of fuel. At today’s rate, a barrel of crude oil costs $99.99. The US Energy Information Admiration (EIA) states from 1 barrel of crude oil (42 gallons) you can get approximately 10 gallons of diesel fuel and 19 gallons of gasoline, plus some other products. This calculates diesel to be about $2.38 per gallon, when in reality it is around $3.79 per gallon. When diesel prices are getting higher and higher as they are, the price of everything gets higher and higher too. Everything in your local grocery store was shipped in from somewhere in the world. However, the mega-mart does not just keep the price the same forever for your favorite products. By raising the price of oil, the price of you cookies is going to go up too, even though they are not made from oil. Who would want a cookie made from oil? The Cost of Living (CoL) depends on where you live. For example if you live in Hawaii, a gallon of milk can cost upwards of $9 because the dairy farmer use mainland feed, and shipping costs get sent all the way to the consumer. However, in Oregon a gallon of milk costs around $4 due to lower shipping costs. Organization of the Petroleum Exporting Countries (OPEC) is a group of countries that hold the price of all their oil exports at the same level (the same price). Some of the countries included under the OPEC name are Kuwait, Iraq, Iran, Nigeria, Saudi Arabia, and UAE. All the countries under the OPEC name produced 81% of the world’s oil in 2012. It is a vicious cycle when it comes to oil prices. First, the oil company raises the price. Then the refinery has to pay more for the crude oil, so they raise their prices too. Next, the shipping company is paying more for the diesel to power their boats, so they too raise their prices. Lastly, now the oil company is paying more to ship their product, so they raise their price a bit more, thus the cycle starts again. Because of this cycle, there is a steady growth of prices across the world for all products. This of course does not always apply to OPEC countries. Stores are not the only companies that would have to raise their prices due to the raise it cost from oil. Transit companies across America are in an upward trend with their fares. Currently TriMet in Portland, OR the fare is: Adult $2.50, Youth $1.65, Honored $1. Unfortunately, the government has a real hard time regulating the price of oil because we buy it from other countries. The biggest supplier of oil in 2013 was Russia with 10.9 million barrels of crude oil. United States was third after Saudi Arabia with 8.453 million barrels. These top three oil-producing countries generate approximately 35.9% of the world’s oil. While the US consumes nearly 26.2 million barrels of oil per day it only produces about 32.3% of that, thus as a country we tend to purchase from other places. This also drives the price up due to ‘Supply & Demand’. Since we have such a huge demand for oil based...

Cited: “Crude Oil and Commodity Prices”. Oil-Price.net. Web. May 11, 2014. http://www.oil-price.net/
“Frequently Asked Questions – How many gallons of diesel fuel does one barrel of oil make?”. U.S. Energy Information Administration. Web. May 11, 2014. http://www.eia.gov/tools/faqs/faq.cfm?id=327&t=9
“World Oil Production Map”. Maps of World. Web. May 12, 2014. http://www.mapsofworld.com/thematic-maps/world-oil-production-map.html
“TriMet Fares”. TriMet. Web. May 12, 2014. http://trimet.org/fares/
“A Partial List of Products Made from Petroleum (144 of 6000 items)”. Raken Energy Corporation. Web. May 14, 2014. http://www.ranken-energy.com/UsefulInfo.html
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Oil Price Rise Essay
  • Oil & Gas Price Evolution Essay
  • Oil and Gas industry Essay
  • The Positive And Negative Effects Of Falling Oil Prices Essay
  • Essay on Oil Industry
  • Oil Price Analysis Essay
  • How Oil Price Affect World Economy Essay
  • Global Oil Market Before and After Oil Extraction in Saudi Arabia Research Paper

Become a StudyMode Member

Sign Up - It's Free
.hack//Roots | Playstation Plus 12 Meses Suscripcion Ps4 (Leer Descripcion) | Mary Murphy