Create a 2 page essay paper that discusses Micro Economic Article: Oil Prices: Whats Behind the Drop.
As the essay declares the reason for the drop in oil price narrows to the supply and demand economics. The supply side of oil is a contributing factor to this situation. Domestic production of oil has been on the rise over the last six years and this led to the push in oil importations to other consumers. Competition for oil markets in the Asian community by the different oil producers has led to the drop in the prices. The different oil producers such as Canada and Iraq have a rise in the production and exportation of oil. The rise in supply of products and commodities in the markets tend to influence the price of the commodity in that it will lower.
As the paper stresses the high supply of oil by the different producers in the market results to the price reduction of oil in those markets. In order to meet the market equilibrium, the producers had to lower the market price if the oil due to the rise in the supply of oil they produced. The demand side of the oil prices drop situation is also contributing to the situation. The weaknesses portrayed by the European nations and the developing nations make the demand for oil be low. Another factor for the low demand is the production of energy-efficient vehicles, electric and hydro cars, which do not require much oil use. Factors that affect the changes in demand of a good portrayed on this side of the situation are contributing factors to the situation addressed by the article.