What is price fluctuation?4 answersPrice fluctuation refers to the variability in prices of goods or services over a period of time. In the construction industry, unpredictable price rises negatively impact projects, leading to financial losses for firms and hindering profit recovery. For agricultural products, price fluctuation poses a challenge to small-scale farmers, causing capital loss and shifts to other activities. To address this, methods like the "ICTAD formula method" and price fluctuation clauses are used to adjust contract prices and share risks fairly between contractors and clients. In supply chain management, price fluctuations can lead to the Bullwhip effect, affecting order variability along the chain. Manufacturers can benefit from accurately predicting price fluctuations to optimize revenue by buying materials at lower prices and selling products at higher prices.
Why do gasoline prices fluctuate?5 answersGasoline prices fluctuate due to various factors such as seasonal changes in refining costs, production adjustments, changes in demand, and increased environmental regulations on gasoline during summer months. Additionally, the volatility in gasoline prices is influenced by the volatility in crude oil prices, with occasional jumps due to global political or economic constraints. Retail gasoline prices often respond asymmetrically to changes in oil and wholesale gasoline prices, leading to criticisms of possible price gouging by the oil industry. Moreover, international evidence suggests that lower gasoline prices in certain countries are associated with higher road death rates, highlighting the complex relationship between gasoline prices and road safety. These combined factors contribute to the dynamic and often unpredictable nature of gasoline price fluctuations.
How fluctuating crude oil prices impacts petrochemical industry?4 answersFluctuating crude oil prices have a significant impact on the petrochemical industry. Studies have shown that global demand shocks and oil-specific demand shocks have a positive effect on crude oil prices, while oil supply shocks have no significant effect. The price uncertainty of naphtha and crude oil directly affects the operating condition and profit of the petrochemical process. The prices of basic petrochemical feedstocks, such as naphtha, benzene, ethylene, and propylene, react to changes in oil prices, with naphtha prices moving one to one with oil prices in the long run. The volatility of oil prices also affects the cost and profit of downstream industries in the petrochemical sector, particularly those at the top of the industry chain. Chemical makers in the industry have been impacted by high feedstock costs due to rising petroleum prices, leading to lower earnings forecasts and financial difficulties.
What is the impact of natural gas and oil on the global economy?5 answersOil and natural gas have a significant impact on the global economy. These energy sources are crucial for international competition, preserving countries' positions in hegemony and the global economy, and driving economic development. Changes in oil prices can affect the macro economy of both developed and developing countries, influencing economic growth, production costs, consumer spending, exchange rates, and international trade. The oil sector plays a key role in the economy of most nations, contributing to economic improvement and having a symbiotic relationship with the global economy. A study on OECD countries shows that renewable energy, oil, and natural gas all impact economic growth, with renewable energy contributing the most. Natural gas can serve as a transitional replacement for oil in the carbon neutrality process, while both oil and natural gas have positive effects on carbon emissions.
How does the energy structure background affect oil market fluctuations?5 answersThe energy structure background has a significant impact on oil market fluctuations. Market power in the oil market can affect the effectiveness of policy instruments used to reduce oil consumption, as well as the terms of trade and carbon leakage. Structural changes in the global oil market, such as financialization and sudden supply and demand adjustments, can lead to volatility in oil prices. Studies using structural vector autoregressions (VARs) have found that both supply and demand factors play an equally important role in explaining oil market fluctuations. Additionally, the identification of oil shocks and the selection of oil market elasticities are crucial for understanding the sources of oil price movements and their impact on economic activity. Overall, the energy structure background, including market power, structural changes, and the interplay between supply and demand factors, plays a crucial role in shaping oil market fluctuations.
How oil crisis affect world economy?5 answersThe oil crisis has a substantial impact on the world economy. The fluctuation of international crude oil prices affects the financial market and triggers financial crises. The relationship between oil prices and corruption directly harms the stability of institutions. Price changes in oil affect every aspect of the economic sphere of each country, leading to economic imbalances and debt crises in developing countries. The oil crisis of 1973 and the subsequent Iranian Revolution in 1979 exposed the West's vulnerability to oil and resulted in international panic and recession. The fluctuation of international crude oil prices pulls the development of the global economy and can contribute to the outbreak of financial crises. Overall, the oil crisis affects the world economy through its impact on financial markets, institutions, economic imbalances, and global economic development.