Case Study in Competitive Open Markets

The World Oil Market

Crude Oil Prices $/

bar

rel

Nominal $ Inflation-adjusted 2011 US$ 2011

Supply: Crude Oil Production

000s

bar

rels

/day

$/barrel

(000s of barrels/day) 56,000

64,0000

30

20

Supply 1979

Demand 1979

Change in World Oil Price 1979 -1980

Supply 1980

SUPPLY: Crude Oil Production, OPEC Countries

31,000

23,000

SUPPLY: Crude Oil Production, Non OPEC Countries

0.25.5

125.

2020) - (30

6464)(56

P%

Q%

Estimating Demand Elasticity for Oil1979-80

Year

19791980

Price$/barrel

$20 $30

QuantityBarrels/day (millions)

64 56

Recent Drastic Movements in World Oil Prices

Historical world oil prices and productionhttp://www.eia.gov/petroleum/reports.cfm?t=66

http://www.wtrg.com/prices.htm

Recent world oil prices:http://www.nasdaq.com/markets/crude-oil.aspx?timeframe=8y

Cartoons:Reprinted by paid license permission from CagleCartoons www.caglecartoons.com Cartoonist: Tab, The Calgary Sun, 2/14/2005Cartoonist: John Cole, The Scranton Times-Tribune, 12/19/2014 Reprinted with license permission from CagleCartoons

References