A mixture of comparatively volatile liquid hydrocarbons (compounds composed mainly of hydrogen and carbon with some nitrogen, sulfur, and oxygen) that occurs in the Earth’s crust and is extracted for use as fuel and various petroleum products, what is this? Crude oil. Because crude oil is a mixture of widely varying constituents and proportions, its physical properties also vary widely. Crude oil is first pumped up from the ground in it’s simplest form. Later, crude oil is transported by pipeline, train, tanker truck, barge, or ocean tanker to oil refineries where it is later sold to factories, gas stations, and car manufactures.
From their it is used to fuel automobiles and machines that later create items such as plastic, cotton, and even metals. Crude oil and oil products refiners and marketers use the futures market to hedge crack spreads and trading margins. There it is separated into simpler mixtures, some ready for use and others to undergo further chemical treatment. Crude oil is essential to our day to day lives and this is the reason why I selected crude oil as my commodity. Its curative powers are calculated to remove pain and alleviate human suffering and disease.
Distilled feet below the earth’s surface, this remarkable liquid is Mother Nature’s oil proved reserves as of December 31, 1997. This is 0. 5 percent, 106 million barrels bounteous gift of healing. It is my pleasure to do my commodities challenge on this astonishing substance. The United States had 22,351 million barrels of crude, less than in 1996 and it is the eighth consecutive year that crude oil proved reserves have declined . How ever, reserve additions of crude oil replaced 95% of 1997 oil production, the best replacement rate in 8 years! This chart is or reserve additions from 1993-1997.
The company transports crude oil to its refineries principally by ship and through pipelines, which link its plants with import terminals. After the refining process, it moves petroleum products to its storage terminals by ship, barge, pipeline and rail. The company operates a 13-strong international tanker fleet, totaling two million deadweight tones. It also has two specialist support vessels to facilitate the transport of crude oil around the world. Each company also has approximately 20 tankers on long-term charter, as well as a large number of coastal vessels.
Crude oil is what creates a very important substance to us, petroleum. Why is it so valuable? How does it differ form other valuable resources? Why is petroleum created for crude oil so important for humans in their everyday lives? Petroleum provides man hundreds of useful products. We burn petroleum for fuel, but the variety of things we make from it is incredible. It is a vitally important, nonrenewable source. Our society runs on it. Petroleum in the form of gasoline powers nearly every U. S. automobile on its annual drive of some 10,000 miles. Petroleum is a mixture containing hundreds of molecular compounds.
There are five major crude oils, naphtha, kerosene, middle distillates, and fuel oils. They come from five major crude oil founders, Boscan, Maya, Arabian Light, West Texas Intermediates, and Bass Strait. See the chart to view the product content of five major crude. Only nine countries in the U. S. had new field discoveries, 114 million barrels, reported in 1997. Of these, only four contributed more than 1 percent to the total. The four major crude oil new field discoveries in the us are Gulf of Mexico Federal Offshore, North Dakota, Texas, and New Mexico.
The definition of the word supply is the quantity of a product (or service) that sellers are willing and able to provide at a given price according to Commodity Challenge. In my own words I would describe supply as the quantity of a commodity that is in the market and available for purchase at a particular price. Demand, by definition according to Commodity Challenge, is the quantity of a product (or service) buyers are willing and able to purchase from the market at a given price. I would describe demand as the amount of good the public is willing and able to purchase at a specific price.
The market place according to The New Merriam-Webster Dictionary is, the world of trade or economic activity. In my own words I would put it as the global being of business, trade, and economics. The petroleum demand and supply outlook for the mid-price case is based on assumed normal temperatures and GDP growth of 2. 8 percent per year in 1998 and 2. 0 percent in 1999. To enhance the usefulness of the mid-case forecasts, sensitivities of energy demand and supply are also derived, using alternative macroeconomics, price and weather assumptions.
A 1% increase in real GDP raises crude oil demand by about 0. 6 %; natural gas demand by 1. 1%; coal demand by 0. 7%; and electricity demand by 0. 6 % (Figure 28 ). The impact of shifts in economic growth varies, depending upon distribution of incremental growth across energy-intensive and non-energy-intensive sectors. A 10% increase in crude oil prices, assuming no price response from non-petroleum energy sources, reduces petroleum demand by 0. 3%.
The firms and individuals that buy my commodity in its simplest form are Gulf of Mexico Offshore, Oryx Energy Company, and Natural Gas Corporation The companies that purchase crude oil include Green Canyon Block, Shell Oil Company, Boscan, Maya, Arabian Light, West Texas Intermediates, and Bass Strait and later refine it. If my commodity demand increases while supplies stay the same the demand curve shifts to the right causing the cost of the commodity to rise because there is already a high demand for crude oil. Also the equilibrium price will rise.