Basic economics state that a change in the supply of a product or service can drive the cost up or down. The more of availability of a product or service generally means there is greater competition to sell these products. However, if the demand increases even as the supply increases, the net costs of the product may increase as well. In other words, even as supply increases, the demand outpaces the supply and thereby increasing the cost to the consumer. This is the scenario that oil markets must consider when buying and selling crude oil.
As more nations move into an industrialized economy, the world demand for oil increases. Other factors which can impact demand are colder than normal seasons, war, industrial growth spurts, and the increase in leisure time and summer travel. The total supply of oil is a comprised of the number of barrels oil producing countries can provide plus the available stocks sitting in storage either on land or at sea in transit. There just as many variables which could... [continues]
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(2007, 11). Supply V. Demand: False Perceptions That Impact Crude Oil Pricing. StudyMode.com. Retrieved 11, 2007, from http://www.studymode.com/essays/Supply-v-Demand-False-Perceptions-Impact-125215.html
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