Summary of article-why you should worry about big oil

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Article: Why you should worry about big oil. The oil industry is in the business of extracting and selling oil. It is the goal of the oil companies to do this as efficiently as possible. One of the main obstacles that plague the American oil industry is access to the world's oil reserves. Many countries in which major oil reserves are located restrict other nations' access. Another obstacle is that nations who were once willing to bargain now realize that the high demand for oil allows them to demand higher prices. Yet another obstacle is the ability to keep up with the replacement of oil reserves. With the high demand for oil in America and the increase in usage by other countries, oil production will need to increase. While we are beginning to see the exploration of unconventional methods, any acceptable replacement for oil is a long way off.

The price elasticity of demand for the oil industry at the present time is inelastic. We have become so dependent on oil that it is considered a necessity that we depend on in our everyday lives. Therefore, we have little other choice than to pay whatever price is demanded. The price elasticity of supply is such that the more oil produced the lower the price. When there is an abundance of oil, the price is lower.

Reference no: EM1313903

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