The Oil and Gas Market
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The United States is one of the main consumers and the third-largest producer in the petroleum world market these days. Having about 4,000 natural gas and oil platforms, as well as 500,000 producing wells, gas and oil supply make 65 percentage of U.S. energy. The gas and oil manufactures consist of 16,000 facilities with a price of $134 billion supply. The success of petroleum U.S. industry led to the creation of 9 percent of new jobs previous year. Thus, energy plays a significant role in rebuilding the economy.
As an economic model, demand and supply determine the price in the market. According to it, the price per unit of a certain commodity varies until it will get the economic balance for quantity and price. It means that the quantity delivered by manufacturers must be equal in current price to the quantity demanded by customers. The article about oil price represents one of the economic laws: when supply is unmoved, but demand falls, it leads to the lower equilibrium price. Hence, it is clear that the set price of $50 is the equilibrium amount (Reddy, 2004). It defines the ability and willingness of consumers to buy the product in a given period of time. At any other price, suppliers will sell different amounts than customers want to purchase.
The United States passed the peak of oil production in 1970, which is now supposed to be the primary cause of the oil supply shock in the 1970s by many industry experts and historians. The fear of Arab states grew because of possible Western energy independence. That is why oil crisis began in 1973, which strongly influenced the U.S. automakers. Petrol became more expensive after the energy crisis that lowered the demand for large automobiles. Nevertheless, the oil supply shock of 1973/74 as external shockwave had almost no effect on the U.S. real GDP and inflation.