What is happening to the price of oil? Why? What is the "fear premium"? What are some of the effects of rise in oil prices? Who are the winners and the losers? How can we counter the negative effects?
13 Comments
Gabrielle Rulon
2/23/2011 03:41:50 pm
The price of oil currently is increasing due to the unrest within the major oil producing middle eastern countries. The widespread fear of the unknown about future stability within these countries has therefore created a fear premium in which many are preparing for the worst. The threat of oil shortages has cause many countries to raise the price of fossil fuels. The rising price of oil will have a large effect on many aspects of society. For instance, the price of food, gas, and other products produced from oil will also go up. Because we are not completely certain about who will benefit from this sudden rise, we cannot distinguish between who the winners and losers are. On the other hand it seems that no one is a true winner or loser within this situation. In terms of limiting the negative effects of the current rise in prices, there is not much we can prepare for at this exact moment in time. This due to the fact that there still remains much unresolved conflict within the middle eastern countries.
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Lauren Brown
2/24/2011 01:43:48 am
The price of oil is going up, and increasing rapidly because most exports from Libya have been shut off, thus effecting the world market and barrel prices of oil. Saudi Arabia has beefed up their production to try and off-set the lack of oil, but Libya is one of our primary sources according to what I just read in the article. The fear premium is that most people are preparing for the absolute worst to happen and that the prices of all the necessities like food and gas, and other things are going to be more expensive...which are some effects of the oil prices going up. To try to answer your question on who are the losers and winners of this situation is that we are all definantly not going to be winners if this keeps going the way it is, because how will we live if everything is just too expensive? And finally, for the last question I am really not sure what we can do to counter the negative effects as of now,but I just hope this problem is solved.
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Kiera Louttit
2/24/2011 06:04:37 am
Due to the political unrest going on in the Middle East and Northern Africa Americans have been seeing the price of oil rising. This rise in the price of oil will affect each American directly or indirectly. When the price of oil rising, the price of almost all good rise because oil is using in the creating and transportation of goods. A fear premium is when the cost of something goes but due to fear of what could happen, we are currently seeing this in the price of oil. I of right now it is hard to tell you will be the winner in this situation, however it is safe to say American consumers will be the losers to a certain extent. I find riding oil prices to be a reason for people to acknowledge how dependent we have become on oil and try to make lifestyle changes to slow reduce or dependence.
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Luke Myers
2/24/2011 10:44:37 am
Conflict in the Middle East has caused oil prices to rise recently. Because many Middle Eastern countries that produce oil for the rest of the world are in a time of political unrest, oil companies are preparing for a government collapse. Prices are going up in the fear that oil producers will fail under an unstable government, which already appears to be the case. Oil companies therefore have to "make oil available to the market in the event of a major supply disruption." The "fear premium" refers to the process of oil prices rising in the fear that oil production will falter in these politically unstable countries. Apparently, the "fear premium" has added $10 to each barrel of oil in Libya, the world's 15th largest crude oil exporter. Some companies have already been shut down in Libya because of the turmoil, and prices will most likely continue to rise until Libya's fate is clear. Does this mean that the surviving Libyan companies will prosper because of the rising prices and fear of the loss of oil? Either way, the United States is kind of effed because gas prices will continue to rise here. Unfortunately, there's not much we can do to restore order in the Middle East. We can only hope that things calm down as soon as possible and prices return to normal.
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Rubi Pelayo
2/24/2011 11:21:57 am
The current conflicts in the Middle East are causing gas prices to rise. The "fear premium" refers to the increase of gas prices as many parts of the world which are in demand for oil are uncertain if the conflicts in the Middle East could stop oil production and exportation. Not only does this fear revolve around high oil prices but also around people's lifestyle which could become significantly more expensive as we heavly rely on oil for the transportation of goods. These oil producing countries are the ones who are benefiting from this situation and the rest of us are losing as we don't have any other choice than to purchase gas at its high price. There is nothing we can really do about the rise of oil prices until the unrest in the Middle East ceases.
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Liam Van Keuren
2/24/2011 11:23:01 am
The oil prices are risin gdue to the revolts and problems in the Middle East. Countries like Lybia make it hard for gas companies to get oil to consumers. The demand is so high that companies can raise oil prices and the demand would barely change because if you have a car you need gas and most people have cars they are the top transports in the world. The gas prices are also rising due to a "fear premium" ehich is the fear of an event will happen. Possibly, all of the Middle East revolts which cuts of gas to other countries and the consumers, just a thought. THe winners would be the oil companies because they are getting more due to the increase in gas and the losers are of course the consumers because we have to pay more.
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Annalotta Saarikoski
2/24/2011 01:31:29 pm
People are getting more and more dependent on oil. The problem is that it's not our decision how much oil there is in the world, and the fact is that the oil reserves are going to end at some point and then the price is going to rise. I dont think a lot of people are going to stop using oil because they need it. They just have to pay more for it. Eventually everyone will lose when they realize they should have conserved.
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Raul Alcantar
2/24/2011 03:36:03 pm
What make oil so valuable are its unique qualities and its scarcity. The price of oil is very sensitive to various factors. In this case, the conflict in Libya incited uneasiness amongst investors in crude oil, which eventually led to a spike in oil prices. As a result, gas prices also increased over the last couple of days. Investors are mostly worried about the consequences of the disorder in Libya, which could in fact lead to instability in oil production. Furthermore, it is possible that this situation may spread to other countries in the Middle East, thus causing even more instability. “Fear premium” refers to the increase in oil price due to investors’ fear of this instability.
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Matt Myers
2/28/2011 01:06:08 am
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Matt Myers
2/28/2011 01:12:07 am
The oil prices are constantly rising and have been doing so for some time now. Recently though, there has been political conflict in the Middle East and Northern Africa. Some of the countries experiencing difficulties are our main oil providers and do to the conflict, we're running out of sources. higher oil prices often translate to higher prices on items seen on grocery store shelfs, thus affecting everybody whether they personally depend on oil or not. We are clearly the losers when it comes to oil, and our suppliers the winners. To decrease reliance on oil and related companies, we must develope alternate fuel sources and actively participate in utilizing them.
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Katey Brown
3/3/2011 12:42:40 am
I've been constantly hearing lately that oil prices are going up, and I've noticed that myself as well. Though, this morning my dad told me that the prices are being lowered now... So that's good.
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Courtney Brown
3/3/2011 12:45:34 pm
Oil prices are increasing very rapidly, and with that also gas prices, oil is a top commodity and people see that if oil goes up everything else does reaching from gas to food as well, people are preparing for what the worst could be, fear premium. When the people realize it's not good to be paying so much for things, it will come back in the end and be able to see what they should have done if they don't stop this. A good way for people to solve this would be finding other means of transportation being more cautious dealing with things like these. Seeing that we aren't the contributors in oil is a defeat for us, but also they need us as well therefore its pretty tied so I don't see who is the winner or loser.
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Diane Meyer
3/12/2011 02:24:47 am
With the rebellion in Libya growing daily, investors are becoming increasingly worried about the future of oil reproduction there. Libyan leader Moammar Gadhafi refused to step down despite the urge for him to do so, which caused unrest in Libya. The price of gas soared, due to the fear premium of the effect this would have on the country's growth and continuation of sufficient oil production. Still, Libyan officials stated that gas production would continue, which allowed the stock market to somewhat stabilize after the sharp decline it suffered when it was announced Gadhafi would not resign. Still, the fear premium created by that announcement is still lingering, as gas prices have not decreased at all. This is going to have a negative effect on business affairs in the U.S. The housing market was just experiencing a growth in house production and buying, however the price of gas is causing possible buyer's to save their money to afford gas, as well as other goods. Commodities such as food and clothing will all likely become more expensive because companies will need to increase prices to make enough money to cover the higher cost of transportation. Therefore, the loser in this situation both the seller and buyer. As buyer's suffer from a rise in prices, seller's will also suffer from a lack of business because no one wants to buy while prices are high. However, without business, seller's will be forced to increase prices even higher to try and generate lost revenue and to stay in business. The effect is an endless cycle which can really only be solved by a decrease in oil prices.
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