Oil Prices
For this assignment,
I decided to talk about oil prices. First of all, I would like to point out the
fact that oil is an essential resource in our economy. Also oil is one of the
most important industries in Alberta.
Oil Prices Chart
In the following
table, we can see the oil prices for the last thirteen months including April.
By looking at the data we can see that there is a significant difference
between last year and this year price. The highest price was on June 1, 2014
(Month 2) at $105.37 per barrel. The lowest price was on March 1, 2015 (Month
11) at $47.60 per barrel. The average price was $76.49 per barrel.
Month
|
Date
|
Price
|
0
|
2014-04-01
|
$
99.74
|
1
|
2014-05-01
|
$ 102.71
|
2
|
2014-06-01
|
$ 105.37
|
3
|
2014-07-01
|
$
98.17
|
4
|
2014-08-01
|
$
95.96
|
5
|
2014-09-01
|
$
91.16
|
6
|
2014-10-01
|
$
80.26
|
7
|
2014-11-01
|
$
66.64
|
8
|
2014-12-01
|
$
54.96
|
9
|
2015-01-01
|
$
50.07
|
10
|
2015-02-01
|
$
52.14
|
11
|
2015-03-01
|
$
47.60
|
12
|
2015-04-01
|
$
49.53
|
After analyzing the
prices on the table for the indicated months it is obvious that the price has
dropped by $50.21 per barrel in the last year. This has a negative impact to
the world’s economy because most industries relies on this resource.
Oil Prices
Equation
Equation Type:
Cubic Regression
Y = 0.1565x^3 +(-2.9026)x^2+ 8.3058x + 98.5614
The graph above shows
the cubic function f(x) = 0.1565x^3 +(-2.9026)x^2+ 8.3058x + 98.5614. This
function shows the decrease in oil price. We can see that the cubic regression
is the one that best describes the data. There were many factors that caused
the oil price to drop including supply in terms of output, access to future
supply, and oil demand. The graph shows that on April 2014 the price per barrel
was about $105.37/Barrel. By the end of 2014 the oil price went down to $54.96/Barrel.
On March 2015, the price for oil hit its lowest mark in the past 7 years with
$47.60/Barrel. Based on the graph, since the price reached the lowest price
point we can predict that the price will bounce back up.
Change in price Chart
The following table
is the change in dollars of the oil price for the past 13 months including
April 2015. In the data, between July 2014 and January 2015 the price gap was
-$55.30. This significant change in price worries the oil industry, mainly
because profits will decrease and they might have to cut costs by laying off
people, shutting down operations, and cancelling projects.
Month
|
Date
|
Change in $
|
0
|
2014-04-01
|
|
1
|
2014-05-01
|
$ 2.97
|
2
|
2014-06-01
|
$
2.66
|
3
|
2014-07-01
|
-$ 7.20
|
4
|
2014-08-01
|
-$ 2.21
|
5
|
2014-09-01
|
-$ 4.80
|
6
|
2014-10-01
|
-$ 10.90
|
7
|
2014-11-01
|
-$ 13.62
|
8
|
2014-12-01
|
-$ 11.68
|
9
|
2015-01-01
|
-$ 4.89
|
10
|
2015-02-01
|
$
2.07
|
11
|
2015-03-01
|
-$ 4.54
|
12
|
2015-04-01
|
$
1.93
|
Change in Dollars
Equation type:
Cubic regression
Y = 0.0314x^3+(-0.2529)x^2 +(-1.4142)x + 2.5639
The graph above shows the cubic function f(x) = 0.0314x^3+(-0.2529)x^2 +(-1.4142)x + 2.5639 . After June 2014,
there was an oil price constant decline until February 2015 where there was a
little increase of $2.07. The price went down again for the month of March
2015, then on the beginning of April the price increased by $1.93. It is
expected that the oil price should increase within the upcoming months.
Pros & Cons of
Current Oil Price trend
Pros
- Due to the low barrel price, gas prices will likely tend to go down.
- Products such as groceries, goods, etc. will tend to be cheaper to transport due to the low price in oil.
- Low oil prices also help to lower cost of living.
Cons
- Lay-offs in the oil industry.
- Weakens economies relying on the oil industry.
- Research for new energies started by Oil companies might not have enough profits to grant research.
Conclusion
After reviewing and
doing all the required analysis, we can conclude that oil prices have an impact
in our economy and our daily lives. The low oil price has affected Alberta in
general negatively. People are losing their jobs, local oil companies are
losing profit, and the city’s economy is getting weaker. According to the
graphs and the analysis made, we can deduct that they oil price will go up
hopefully by the end of the year.
References
