Business economics Essay Example | Topics and Well Written Essays - 1000 words

Business economics - Essay ExampleThe largest consumers of fossil fuels are the automobile industry and the electric index generation industry. Major manufacturers of the homo also rely mostly on bunker fuels to run their factories. What peak inunct means is that inunct production is now on a downwardly slope due to declining oil production from rapid depletion of this non-renewable energy source. Oil is also an energy that has security risks involved as its source, chiefly in the bosom East, has been wracked by production disruptions lately. Economic development for the past several decades has been anchored on the assumption of cheap oil supplies but this is not true anymore. Fossil fuels or hydrocarbons have supplied the most of energy requirements for transportation and also for the production of fertilizers, plastics, fibers, pesticides, detergents and even pharmaceuticals (Abdullah, 200518). It is quite ironic the automobile industry is only now again revive electric car s although the technology had been around since the invention of cars centuries ago but shelved due to the availability of vast cheap oil which precluded further development of electric and crisscross cars (Anderson, 20104). Market Structure the oil industry is an oligopoly. ... To date, the only large areas still left unexplored are the large patch of ocean in the confederation China Sea known as the Spratly Islands group (Deffeyes, 20019) and the cold Arctic wastes of the North Pole (Myers, 20111). The global warming from climate change had made the icing the puck glaciers retreat which now opened many new inaccessible areas to possible oil and gas exploration activities. Price Discrimination the oil industry had been aerated in the past of this bad practice as it has a complete hold on oil production and sale. There is latent price tacit consent among the oil producers in which one leading producer can increase its prices at will and then followed by the other producers (OP EC is an example although its pricing power has weaned recently). Other practices include setting the maximum price that the market can bear as producers in oligopolies are price-takers (ability to set the price) especially with oil becoming a diminishing commodity. Industry players are able to do this because of price inelasticity in oil demand in some markets. Government Regulations the oil industry also stands accused of price gouging in which the players take advantage of price volatility in the international markets to their own advantage. Although many factors determine the gun price at the pump, it has been estimated only 85% of price changes are due to changes in demand conditions worldwide. This is further complicated by growing demand from quick powerful economies like China and India. In the United States, Robinson-Patman Act (1936) makes price discrimination an illegal practice. It is rarely enforced due to the difficulties in monitoring volatility and the many factor s driving gas prices. Global Business Environment the industrialized