Supply-demand imbalance boosts oil pricesFrom this article, our knowledge of demand and supply can be used to analyze the current situation in which the oil industry is facing.
David R. Baker, Chronicle Staff Writer
Tuesday, May 27, 2008
Even as the cost of crude oil has soared in recent years, the amount pumped from the ground hasn't.
Worldwide oil production has barely budged, despite record prices. Since the start of 2004, oil's price has gone from $33 per barrel to $132. Production, meanwhile, has risen just 1.8 percent, to 84.6 million barrels per day.
That's not enough to keep pace with the world's growing thirst for oil, which has increased 3.7 percent during the same time. And the imbalance between supply and demand keeps pushing prices higher. It's one of the main reasons gasoline now costs more than $4 per gallon.
This isn't the way economics are supposed to work. When a product is in short supply, the price rises, and the companies that make it usually produce more so they can cash in. Supply eventually outstrips demand and the price goes down.
Faced with rising global demand and record prices, the oil companies have a powerful incentive to find, pump and sell as much crude as they can. Instead, they're having a hard time keeping their output level, much less expanding it. Big, untapped oil fields - often called "elephants" in the industry - are harder and harder to find.
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Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/26/BUHH10S61B.DTL
IEA Cuts Oil Demand Forecast to Lowest in Five Years (Update1)
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By Grant Smith
April 10 (Bloomberg) -- The International Energy Agency expects global oil demand to decline by 2.4 million barrels a day this year, about the same amount that Iraq produces, as the economic slump reduces consumption to the lowest since 2004.
The adviser to 28 nations cut its 2009 forecast for an eighth consecutive month, slashing last month’s estimate by 1 million barrels a day, or 1.2 percent, to 83.4 million barrels a day. The IEA also said oil supply from outside the Organization of Petroleum Exporting Countries will drop this year...
Future Supply Constraint
Over the next five years global supplies will be “severely constrained by today’s lower prices and lower investment,” the report said. Spending on new production will likely be constrained by around 20 percent this year...
Need for OPEC oil
“In response to weaker demand Saudi Aramco cut the May price for its flagship Arab Light to all regions for the first time in five months,” the IEA report said, referring to prices announced by the Saudi state-run oil company on April 5.
Hello(: I thought it would be interesting to read this article about the merger between StarHub and SCV and think about the reasons behind their decision.
Here's part of the article and below the article are the benefits of the merger that I evaluated (with the help of another article http://www.ida.gov.sg/doc/Policies%20and%20Regulation/Policies_and_Regulation_Level2/proposed_consolidation_starhub_SGcable/Joel.pdf
By Irene Tham
Wednesday, May 02, 2001 05:28 PM
The merger will give StarHub a residential network for carrying video, voice and data services. The telco currently offers fixed-line data and voice services to corporations and runs a mobile phone network. "The synergies are obvious. SCV has a nationwide broadband network that reaches all homes in
To date, SCV has more than 265,000 cable TV customers and 50,000 broadband subscribers, while StarHub has captured 10 percent of the
Heightened competition
Analysts believe that the merger will increase competition for Singapore Telecommunications Ltd, the island's dominant telco.
"StarHub will have a full infrastructure to compete more effectively with SingTel," said an analyst with a foreign brokerage firm.
The merger will also allow StarHub to offer telephone services to the residential market, a plan delayed by IDA's sudden decision to liberalize the telco industry two years in advance.
Before the merger, both companies operate on two different markets. With the merger between StarHub and SCV, StarHub's fixed-line, wireless, long distance and Internet service business units will be combined with SCV's cable TV and residential broadband Internet access businesses.
Benefits of the merger
There are many benefits of merging StarHub and SCV, one of which is to reduce potential competition between StarHub and SCV in terms of broadband services.
This is due to the possibility of the markets of the two companies intersecting in the future due to the fixed telephone line. Without the merger, StarHub might want to introduce new services such as the xDSL(Digital Service Line-a family of technologies that provides digital data transmission over the wires of a local telephone network) to its residential subscribers to convince its existing users to switch over to broadband (increase revenue) and to alleviate the amount of subscribers switching to other Internet Service Providers (company that offers its customers access to the internet) The xDSL service will likely be more popular among consumers as it uses high frequency, while regular telephone, that of SCV uses low frequency. Hence with the merger, there would be a reluctance to introduce xDSL services to residential subscribers as it will be easier to capitalize on one service rather than to focus on a new service.
By merging, the new company will create a stronger competitor to other telecommunication and internet service providers in
Connie (: