Archive forprice change

Why the oil price is falling

http://www.economist.com/blogs/economist-explains/2014/12/economist-explains-4

We all know that oil price is partly determined by actual supply and demand, and partly by expectation. 

The Organisation of Petroleum Exporting Countries(OPEC), which controls nearly 40% of the world market, failed to reach agreement on production curbs, sending the price tumbling. we learned in class that OPEC works as cartels to realize the most benefit for every member. However, this time, the Saudis and their Gulf allies have decided not to sacrifice their own market share to restore the price, which is one one of the reason why the price of oil keep go low. This article list four main reason what cause the  oil price down. 

By the way I want to talk a little bit more about shale gas and other new energy. New energy rather than oil play an important role which cause the fall of oil price. According to supply and demand, when the price of oil is too high, people will try to find something cheap to instead oil and right now in PA shale gas has already used and take huge percent in market.

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Competitive Holiday Season Looms Ahead

Walmart is the world’s largest retailer. Despite this, the company still has fierce competition with other firms such as Kohls and Target. Though Walmart reported a quarterly upturn in sales when matched against comparable firms, it still has much to worry about. More so than ever, Walmart is feeling the effects of online shopping. There is an intense rivalry between Walmart and online firms such as Amazon. This worry is increasing as we approach the holiday season, a season in which sales are at their peak. To combat this threat, Walmart is instituting a price match feature at all 4,300 U.S. stores. Essentially, if shoppers can find a product for a cheaper price online, Walmart will match the price in stores. Sales in stores have been rising, but the increase has been primarily limited to home goods, health, and apparel departments. Many of the objects that are true luxuries are being bough online, and Walmart wishes to change this before the holiday season is upon us. So far this method seems to be working. Walmart’s total revenue has increased by 2.9%, bringing it to a total of $119 billion for the 13 week quarter. In comparison, similar firms only experienced an average increase of 0.5%.

This is a great example of a competitive market. Though it is not for a specific product necessarily, these ‘super stores’ as a whole can be directly compared. They are in constant competition and utilize the strategies of other firms to increase their own profits. I find it very interesting how the online market has a direct impact on the sales in physical stores, and what various firms are doing to counter the loss of sales. It will be interesting to look at the numbers after the holiday season and see if this strategy truly works. From a consumer standpoint, it seems like a good deal. You can buy a product for the same price as online without paying and waiting for shipping. I am excited to see if Amazon and other online retailers bring about a new deal to counter Walmart’s latest move.

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Winter is coming: Road salt supply low, demand high

This article is an example of the concepts of shifts in demand and its effect on price. This article is about the low supply of road salt, despite its high demand due to the past year’s harsh winter. Because of the higher demand and low supply of road salt, the price is increasing. Its prices have gone up because of its lack of availability. Salt mines are feeling the pressure by a large amount of local governments “trying to replenish their supply at the same time.” People are trying to stock up early for this winter, especially because there is a general consensus that it supposed to be even worse than last.

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Oil and the global economy

In this post, the author describes the effects of the fall in price of oil and how it connects to the global economy. The drop in prices effect the world’s economy due to the fact that oil is a necessity that is hard to come by. No matter what, every country needs oil, and the lowered price creates a higher GDP for each country.

The article talks about how Saudi Arabia is attempting to raise the prices because it is a top exporter of oil. They are attempting this by reducing the production. This is very similar into what we are doing in class.

There is another similarity between this article and class, which is the relationship of a domestic product and world prices. The world price continues to drop closer to the domestic price of Saudi Arabia.

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Why Drop in Oil Price Could Squeeze U.S Economy

The following article talks about how a decline in the price of oil could inversely affect the oil industry and the economy in general of the United States. Such price drop, created when there is plenty of supply but not enough demand, is a good sign for the consumers and acts as an economic growth uplift, but it can also hurt the US exports, spending and employment. Through a comprehensive and easy-to-follow analysis, the article points out the implicit downsides of the reducing fuel price by touching on several familiar topics that we have learned in class, including supply & demand, exports & imports, global supplies, change in price, etc.

http://www.cnbc.com/id/102083493

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Price and demand increase of fruit in southern India

 

This article, posted in December 2013, deals with price increase and demand for fruits in India. There had been many changes during this crop season: prices for apples and grapes have increased, there had been a shortage of bananas, and the supply of oranges grown had increased. Due to the higher prices of apples and grapes and the shortage of bananas (causing bananas to become more expensive), oranges became the more popular fruit in southern India. Oranges are being sold at RS40 per kg, while apples are being sold at double the price of oranges.

Demand is a big factor during these rapid changes. Due to the high demand of oranges, importation of oranges had greatly increased. Even though more oranges were imported than previous years, the charge to transport this fruit did not increase.The rise of oranges imported is evident by the massive amount of oranges being imported to markets in India. The main market in Chennai receives about 150 tonne daily and the Kochi main market receives 100 tonne daily.Liaqat Ali feels it is still too early to predict supply and demand though. “We have to wait till January-February when the demand goes up.”

Will these prices become permanent and will the demand for oranges stay this high for years to come?

 

Link: http://articles.economictimes.indiatimes.com/2013-12-19/news/45377538_1_oranges-diesel-prices-supply-and-demand

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If the team does well, so does the city

This article explains the effect of NFL game performances by teams and how this affects the prices of tickets. The San Diego Chargers have been doing extremely well this season and therefore the attendance to games has increased significantly. Tickets at the beginning of the season cost an average of $177.06 on the secondary market but after their consistent wins on the field, the price of tickets has now increased to $219.20, “a 23.8% increase in five weeks,” which is astounding. Go Chargers! The Buffalo Bills have also been playing very well and their tickets have had an 8.5% increase in price on the secondary market. Unfortunately for the New Orleans Saints, whose performance has disappointed so far this season, tickets have dropped from an average of $268.53 to $250.14, a 7% drop.
This trend in prices displays the effect of expectations on the demand market. Because supply for the tickets of these games is constant, the better or worse the home team performs affects the quantity demanded. When they perform well, this causes the demand curve to shift up and to the right, therefore creating overall higher priced tickets. When a team plays poorly, the demand curve shifts down and to the left instead, creating a lower ticket price. This shows that not only does team performance affect the prices of tickets but how much American Football is a major element and pastime in our domestic economy.

Article – http://www.forbes.com/sites/jesselawrence/2014/10/07/early-season-records-for-chargers-and-saints-driving-ticket-price-changes-on-secondary-market/

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Recent Drop in Ethanol Price

http://online.wsj.com/articles/ethanol-prices-slide-amid-supply-spike-1412267548

A recent drop in the demand for ethanol has sent prices lower than they have been in up to four years. In class we studied the concepts of supply and demand and their impacts on the price of a product or good. In this article we can see that there is a clear surplus of ethanol which is causing the price to decrease significantly. A price drop in ethanol isn’t bad news for consumers of gasoline due to the fact that they are close compliments as standard gas is made up of 10% ethanol. While US citizens enjoy the price drop acts as a detriment to Ethanol makers. However, in recent history the ethanol industry has experienced a market that fluctuates heavily so this fall is something that the producers can recover from.

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Decline in World Prices for Oil

http://www.economist.com/news/business/21623694-price-oil-has-been-tumbling-cost-finding-it-has-not-unsustainable-energy

As this article explains, the worldwide oil market is currently experiencing a significant decline in prices. Part of the decline is linked to the slowing rate of economic expansion in China and Europe, meaning that people living there have less disposable income to spend on gas. This results in a decrease in demand, or, on an economic model, a leftward shift of the demand curve. There is also a much greater supply of oil, particularly in America. Domestically, this shifts the supply curve to the right. For other oil producing countries, this means another leftward shift in demand.

 

For the overall market, the leftward shift of the demand curve and simultaneous rightward shift in the supply curve creates a surplus. Saudi Arabian suppliers are attempting to reach equilibrium in the market by cutting prices. However, while Saudi Arabia’s market can afford to be relatively elastic, many producers have invested in projects to increase the supply of oil in response to expectations of higher prices in the future. In the long term, producers are likely to invest money in other areas and eventually decrease the supply, but for the time being, the surplus only continues to rise. In all, consumers are better off thanks to lower prices. However, producers stand to lose a lot of money, as the oil they invested trillions of dollars into producing is being sold at ever-lower prices.

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Amazon Ebook Prices Decreasing?

This article explains Amazon’s ideas for decreasing the price of their ebooks. By dropping the price of regular ebooks from $14.99 to $9.99, the company hopes to increases sales by a whopping 74% – from 100,000 to 174,000 in the example given.

Amazon is trying to increase demand and supply by lowering the price of ebooks and therefore creating a new equilibrium quantity and price for the ebook market. Other book sellers are not happy with this attempt, and consumers and authors just want to be able to sell their books already! Although the end result should be beneficial to all but Amazon’s competition, by the time the result actually comes around consumers and authors may be too angry to go to Amazon.

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