Demand for Oil (Edexcel GCSE Geography B)
Revision Note
Written by: Bridgette Barrett
Reviewed by: Jenna Quinn
Distribution of Oil Reserves
Although every country in the world uses oil, the reserves of oil are unevenly distributed around the world
The figures for oil reserves are estimates as exactly how much oil is located underground is unknown
The amount of oil is finite - at some point it will run out
The estimates of oil reserves change as the technology to find and access oil improves
In 2016 the U.S. Geological Survey (USGS) estimated 20 billion barrels of accessible oil was in the Wolfcamp Basin, Texas. In 2018 this estimate was changed to 46.3 billion barrels
Oil production is also unevenly distributed
Causes of Increasing Oil Consumption
Oil consumption is increasing around the world
China and other emerging countries are experiencing the largest increase in consumption
The increase in consumption is due to:
Increasing world population increases energy demands
As countries become wealthier the demand for products increases and people have more things which use energy
Increasing amounts of technology which use energy
Factors Affecting Oil Supply & Prices
The world oil price fluctuates and is dependent on a range of factors including:
Conflicts
The invasion of Ukraine by Russia led to oil prices soaring due to concerns about global supply
Diplomatic relations
In 2010 Venezuelan President Chavez threatened to stop oil sales to the USA
Recession/boom
In 2008 the financial crisis and recession led oil prices to fall steeply
Before 2008 economic growth led to a steep rise in oil prices
Over/under supply
In 2013-14 a rivalry between Saudi Arabia and Iran led Saudi Arabia to increase the supply of oil which caused the price to fall
A decrease in supply leads to an increase in price such as in the period following the Iranian Revolution in 1979
Customer preferences
Customers may prefer alternative/renewable energy sources and this can cause a fall in demand which then leads to a fall in oil prices
Worked Example
Study figure 1
Explain two reasons for lower fossil fuel prices in some years
(4 marks)
Answer
Prices in Figure suggests falls could be triggered by peaks (1) showing commodity prices can rise / fall in cycles (1)
Consumers may seek out / be attracted to alternative energy sources (1) so oil producers lower prices to lure them back (1)
Prices fall in 2012 might be because supply increased (1) for instance due to political decisions by oil producers to increase output (1)
Prices fall in 2008 might be because demand fell (1) which may be linked to world events / happened in the global financial crisis (1)
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