1. The World Oil Market in 2008

2. For more resources on the economics of Oil & Gas, visit our dedicated Economics Blog Channel

3. Market volatility Crude prices reached a record high in July of $147 a barrel By the end of the year prices had collapsed – on one measure light sweet crude oil fell below $40 a barrel OPEC is desperately trying to stabilise prices through a series of production cuts The main cause of the collapse in prices is a sharp fall in global demand for oil

4. A super-spike in prices

5. Where next?

6. Oil – a case study in price volatility

7. Explaining high and low oil prices Quantity of Oil Price per barrel Short run supply Demand P1 Q1

8. Explaining high and low oil prices Quantity of Oil Price per barrel Short run supply Demand P1 Q1 D2

9. Explaining high and low oil prices Quantity of Oil Price per barrel Short run supply Demand P1 Q1 D2 P2

10. Speculation can cause price spikes Short run supply Demand P1 Q1 D2 D2 + speculation P2 P3 Quantity of Oil Price per barrel

11. Supply more responsive over time…… Short run supply Demand P1 Q1 D2 D2 + speculation P2 P3 Medium term supply P4 Quantity of Oil Price per barrel

12. Falling demand as recession bites Short run supply D4 P1 Q1 D2 + speculation P2 P3 Medium term supply P4 Quantity of Oil Price per barrel

13. Falling demand as recession bites Short run supply D4 P1 Q1 D2 + speculation P2 P3 Medium term supply P4 Quantity of Oil Price per barrel

14. Oil prices and the number of rigs

15. Will OPEC succeed in cutting output and stabilising prices?

16. OPEC’s share of world supply

17. UK oil consumption now at a twenty year low

18. Oil producers – selected countries

19. How much will world demand fall in 2009?

20. Oil provides a bonanza for some

21. The UK is now a net oil importer

22. UK quarterly balance of trade in oil

23. And North Sea oil output is well beyond the peak

24. Crude prices and prices at the pumps

25. Marginal and average cost It has been estimated that the average cost of oil per barrel is around $50 And that the marginal cost of bringing on additional output is between $75-$80 per barrel Explain some of the reasons why there is a difference between the marginal and average cost of production.

26. Oil Market Videos OPEC agrees record oil output cut Russia rues oil price fall Oil prices fall below $50 per barrel Oil price affects crayon firm High oil prices lifts BP profits New battle over Arctic oil Why High Oil Prices Hits Us All