Essay on Economics: Future Prices of Gas and Gas Products in Qatar

2021-06-01 21:20:29
8 pages
2089 words
Categories: 
University/College: 
Middlebury College
Type of paper: 
Essay
This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

With the high fluctuations in the prices of gas globally, there is bound to be realized changes in the prices of the same thereby establishing the need to examine prices of such products among them being condensate. It is evident that the process of exploiting gas and petroleum products involves various stages and requires deep analysis to ensure that every factor is put into consideration. In this manner, the determination of future prices call for the examination of various factors to ensure that there are no loses associated with the process of exploitation and selling of oil and gas products. In spite of the fact that various factors come at play in the process of determining future prices for oil products, the main determinant is the global oil prices. Such is because the global oil prices keep on fluctuating and depends on various factors among them being the global peace and changes in technologies of exploitation and processing.

Fluctuation of the prices of oil and gas is a major factor to be analyzed and this is evident in the wide changes in the prices making it challenging to predict the likely future prices for gas and other products such as condensate. An example of such a fluctuation is evident in way prices of oi per barrel has fallen where at the start of the year 2016, the price of oil per barrel was $27 and it swung to $42 by the mid of the year 2016. Such a fluctuation is not only apparent in the year 2016 as there have been various cases of fluctuations and this is evident in the highest oil and gas prices in the year 2008 where the price of oil per barrel was $145. The fluctuation in the various factors used in the determination of oil prices affects the possibility of predicting the future of gas products.

There have been various changes in the costs of drilling and exploration and the same have been of great impact in the calculation of costs of prospecting, exploration, exploration and production of the gas from various wells. However, there are specific time of the years when there is the ease of predicting the prices of gas products and the same help in the examination of fluctuations of oil and gas products in the industry. It is factual that autumn and winter seasons of the year are very cold thereby leading to the increase in the demand of such products hence the increase in the cost of gas and related products. The high production of gas in Iran and Qatar create a different equation in the examination of prices of gas products in the society. This is because after the tension in the Middle East and the end of cases of terrorism in the country, Qatar has begun exploration and exploration of its oil wells which has led to tremendous increase and supply of gas in the market.

In this manner, despite that high demand of gas during autumn and winter periods, it is evident that changes in the gas prices would not be alarming as there the increase in demand is bound to balance with the high production of gas in the Middle East. One other factor that proves prudent for analysis is the depletion of oil reserves in Dubai. Dubai has been a major producer of oil globally and has helped in keeping the global oils market afloat, however, there decline in the oil industry and the change of the economic production from oil industry to tourism suggests that there is bound to be realized a huge change in the gas production hence the prices of gas and gas products. The increase in industrialization in the contemporary society has led to the increase in the demand for gas and gas products thereby leading to the increase in the prices of the same in the modern society. There is the need for the population to ensure that every well that has been exploited is used effectively and outcome from the same helps in the improvement of the living conditions of the population.

In the estimation of the economic life of oil and gas production in the oil producing countries, there is the need to acknowledge the importance of the life of individual wells because it is from the wells where oil and gas are produced. In the estimation of economic life of wells, factors that come into play are such as the cost of wells, condensate flow rate, gas flow rate, gas gravity, oil gravity content of hydrogen sulphide, and the reservoir pressure. It is apparent that the examination of the main factors that affect production of gas help in the examination of economic viability of wells and the future costs of gas and gas products such as condensate in the process of production. The prices of gas and the related products are affected by various factors among them being tax that is levied by the countries in which the gas is produced. Increase in the taxes result to the increase in the cost of the gas produced hence affecting future prices. Additionally, the cost of production has related effects to the costs of selling gas and gas products.

With the current low prices of oil and gas in the global markets, there have been calls by the oil producers to regulate production of oil to help in the boosting the prices of gas and increase profits and revenue from the same. There was a suggestion in the year 2016 where oil ministers from the major oil producers such as Saudi Arabia, Qatar, Russia and Venezuela which agreed to cut production of oil to enable them match demand and the supply of oil and gas in the global markets. There is the need to appreciate that such a strategy would lead to the increase in the prices of gas in the global markets. The only challenge that is associated with the plans by the oil-and-gas-producing countries is that there is a lag between such decisions and the effects that they have in the market. There is, therefore, the need to acknowledge the importance of such decisions in controlling gas prices and the prices of gas products to prevent oil-producing countries from making loses that can lead to detrimental effects in the economics of the gas-producing countries.

In the attempt to freeze oil production, there is also another challenge in such plans, and that is the unity of oil-producing countries. It is apparent that there are cold wars between countries and unity between countries play a critical role in the plans to control production of gas and gas products. The effect of lack of unity in freezing production of oil played out in that after countries such as Venezuela, Russia, Saudi Arabia and Qatar agreed to freeze production of gas and gas production, there was another oil-producing countries that differed the agreement to freeze production, and in turn acted contrary to the agreement. Despite the plans to freeze production, Iran doubled its production and called the plans by the four oil-producing countries a joke. In response to Irans plans to double its production, the plans by the four countries that such a freeze would lead to increase in the gas prices by 5 percent, there was a fall in the prices to below $30 per barrel. There are various dynamics that play out in the determination of prices of gas and gas products in the modern markets thereby making it a challenge to determine the future prices of the same.

With the current fluctuations in the oil and gas products in the population, it is expected that the prices of gas and related products would be around $50 for foreseeable future. The current low prices of oil and gas resemble the prices of gas that was witnessed more than 150 years ago. The prices of gas and gas products as of the year 2014 is the lowest prices of gas and gas products in 150 years. In this manner, it is apparent that estimation of gas and gas products such as condensate would be very low and estimating the actual prices of the same is challenge. The current low prices of oil and gas in the global market is due to both oil bust followed by oil book that would have an impact in every country and every economy. There is the need for the population acknowledge the benefits of the same and help in addressing challenges associated with the fluctuation in the oil prices in the market. However, controlling the oil prices is challenge thereby establishing the challenge of estimating future oil and gas prices in the global, economy. There is the need for economists and researchers to engage in studies that can help in understanding dynamics associated with prices of gas and gas products in the modern society.

In the study of fluctuations of gas prices and prices of gas product analysis of the effect of Gulf Cooperation Council (GCC) countries proves to be of great importance. It is because the GCC countries greatly affects the prices of gas and gas products as they control the prices at which the gas and gas products are sold in the market. The GCC countries need to play a crucial role in the determination of sustainable gas prices. The GCC countries decry the low and fixed prices of gas that has been in existence to the population for years and has led to various negative effects to the oil producers in the population. The ow prices of gas and gas products is only beneficial to the downstream industries, power producers, and consumers seems to be unsustainable to gas producers in the market. In this manner, there should be made the right reforms that can help in the determination of the right prices that can book investment in oil and gas industry. Reforms should ensure that prices of natural gas get closer to the true market value and that and reflect dynamics in in both the global and regional supply and demand of gas and gas products. Such would ensure that there is growth in the social dynamics of the population. As such there would be increase in the investments in the gas industry ad help in the improvement of economies in the population.

The determination of gas prices also makes use of the technology used in the process of exploration and exploitation of gas and gas products. This is because items such as the drilling rigs used in the process of exploitation of gas proves to be of great importance as the more efficient drilling rigs helps in the reduction of the costs of drilling as they are efficient in consumption of fuel and such rigs are long-lasting. It terms of depletion period of gas and gas products that is employed in the process of exploration, and exploitation, there is the need to appreciate the role that the rate of depletion period plays in the process of determining the final prices of gas and gas products in the contemporary market in the society The prices of the gas and gas products should be set in a manner that it agrees with the depletion period and ascertain that by the end of the depletion period, oil producers make profits and they take charge and help in the improvement of the conditions of the population.

The rate of decline is another factor that plays out in the estimation of future prices because of gas and gas products need to ensure that as the quantities of gas decline in the wells and reservoirs, there is increase in the profits and revenues that are made from the sales and that the sales help in the building of industries that are of great importance for the growth of economies in the modern society. There is a need to acknowledge the role of the rate of decline in the determination of the future prices of oil. In this manner, realization that quantities of gas volumes in the reservoirs would decrease and eventually fall leads to the necessity of increasing the prices of gas and gas products to cushion companies from the great losses that can incur. Severance tax and the discount rate are factors that need to be put into consideration into the process of determining prices of gas and gas products such as condensate the results from production process.

Conclusion

Although it is factual that estimation of future prices of gas and gas products such as condensate, there are various factors that come into play and it is afte...

Have the same topic and dont`t know what to write?
We can write a custom paper on any topic you need.

Request Removal

If you are the original author of this essay and no longer wish to have it published on the collegeessaywriter.net website, please click below to request its removal: