Global Oil Crisis

Can We Find a Solution to the Global Oil Crisis in Supply and Demand?

Leonardo Londono
Macroeconomics 211
Professor Chavarria
March 15, 2011

Abstract
This paper explores published documents that report on result from research conducted on online articles and their relationship to the global oil crisis in supply and demand and how is affecting the economy worldwide by rising of prices.The paper explains the definitions of supply, demand and theory and also examines the Organization of Petroleum Exporting Countries (OPEC) as an organization that controls the majority of oil production and how they confront the situation that is causing global concern in relation to research alternatives resources to suggest and to be studied in order to substitute oil as primary resources andunderstand how OPEC influences the economy relationships with other countries.

Can We Find a Solution to the Global Oil Market Crisis?
Introduction
The essential model of supply and demand is the root of microeconomics. Is an important instrument that helps us understand how and why prices alter and any situation that will take place once the state intervenes in a market. The theory ofdemand has a big value in studying the oil market nationwide and worldwide, as demand is one of the fundamental tools for determining prices, raising a number of factors affecting both directly and indirectly the prices.
The purpose of demand theory is to clarify certain changes that occur within the economic atmosphere, looking for this consumer deeds in order to demonstrate the majorfactors that influence consumer decisions. By means of introducing a set of functions that have an effect on demand, the price-quantity demanded, the elasticity that this holds, between other helpful approaches that permit us to make decisions in unusual situations.
This theory has been applied to problems that are happening now with oil because the scarcity and growing demand is causing this upwardtrend in oil prices.
The problem that we are experiencing at this time worldwide is the "global energy crisis" and is the central problem as it frequently refers to a decrease in the availability of oil, electrical energy and other natural resources. This new global oil crisis is caused by the collision between two opposing factors, one social (consumption growth) and the otherphysical-geological (depletion), which is generating poor economic performance in a lot of countries, given the enormous degree of dependence on industrial actions and transport, easy and cheap energy.
As today, the big reliance from oil and its derivatives is becoming more limited and expensive because is a nonrenewable resource and is indispensable for the humanity to work further with the solution ofalternative fuels and/or energy, to substitute and shrink the domestic demand for that product. Along with the different sources that could be used we can find natural gas, wind energy, photovoltaic solar energy, hydraulic power and bioenergy. In our world, all that we have today has an unseen link to oil; even all industrial product or activity is needy on the fossil resource that is beingdepleted fast.
Supply and Demand
The price of a product is determined by a balance between supply and demand. The model of supply and demand describes the interaction in a particular market or between consumers and producers regarding the price and sales of such property. Is the fundamental model of microeconomics, and is used to explain a variety of micro-scenarios. The first individualon describing this behavior was Antoine Augustin Cournot, and was popularized later by Alfred Marshall. This model predicts that in a free and competitive market, the price is established according to the quantity demanded by consumers and the quantity supplied by producers, creating an equilibrium in which consumers are willing to buy everything is offered by producers at a price set by that...