Assignment:
1. Based on the information from the US Energy Information Administration, create the supply and demand graph in the space below. This information is helpful for the client to know how much oil to produce.
2. Also identify the price and quantity at which equilibrium exists. This information is important for the client to determine the quantity of oil to produce for profit maximization. Identify this information on the supply and demand graph you created below.
3. Finally, determine if the oil and gas industry is in perfect competition, an oligopoly, or a monopoly. You may need to examine additional information on competition production and pricing decisions, monopoly production and pricing decisions, and price discrimination to answer this question. This information will help the client to determine pricing strategies. It might be helpful to know how many publicly traded companies exist globally. You might also want to read about how crude oil is priced.
4. Over the past 12 months, what has been the price range of regular unleaded gasoline, natural gas, and two or three types of crude oil? Traders and speculators can buy oil contracts for future delivery. Does this make the market perfect competition? (To answer this question, you may need to visit www.OilPrice.com, the American Petroleum Institute website, or the US Energy Information Administration website.)
Step 1: Create a Supply and Demand Graph
Step 2: Analyze Cost, Pricing, Elasticity, and the Production Function
Step 3: Prepare Executive Summary and PowerPoint Presentation