Introduction is the condition of U.S. oil

 

Introduction

The
Article “U.S. Oil Exports Double,
Reshaping Vast Global Markets” was published in June 7, 2017 by Wall Street
Journal. It is written article by Lynn Cook about Export of Oil and its impact
in Global Markets. It mainly emphasize on what is the condition of U.S. oil
exporting, and how it is reshaping the global markets.

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Reaction

American oil exports
are emerging as a disruptive new force in global markets. The U.S. exported 1
million barrels of oil a day during some months so far this year—double the
pace of 2016 and is on track to average that amount for all of 2017, according
to a Wall Street Journal analysis of data from the U.S. Energy Department and
the International Trade Commission. After reading the article, I think America
will surely double the exports of Oil to overseas. It has achieved tremendous
response from its market partners to purchase oil due to price flexibility and
discounts offered. The market policy applied by American Oil Exports is good
enough to lure maximum number of purchasers. It is nearly in the verge of
doubling exports of oil by the end of 2017. If I have to go through the basic
reasons behind this progress by U.S. is due to technological Progress achieved
by United Stats so far. Due to advancement in technology, it has been able to
produce beneficial amount of Physical Capital and Productive Human Capital. Technical
based education standard also help to get technically sharp and focused
graduates from colleges and Universities. I believe American Oil Exports will
surely maintain this standard for oil exporting which will reshape the global
market.

How it Relate to Class?

U.S.
exports make up just 1% of global oil volumes, they are a new factor helping to
tamp down prices and keep them range bound between $45 and $55 a barrel. And,
American crude has been selling at a discount of roughly $2.50 a barrel. It helps me to understand
the relationship between supply and price. Here, the price of oil is decreased
for purchasers by American Oil Exports Companies. So, due to decrease in price,
the supply of oil to overseas increases. This is one of the main reason behind
doubling of oil exports in this year compared to 2016. That spread makes it profitable to pay to
transport U.S. oil to farther flung locales. If U.S. oil’s discount to Brent
gets bigger, American shipments will ramp up. If it shrinks, less U.S. oil will
flow overseas. The Article also says “In
late May, Occidental Petroleum Corp. successfully tested docking a supertanker that can hold more than 2
million barrels of crude. The test at its shipping terminal in the Port of
Corpus Christi was part of a plan to eventually export bigger shipments from
Texas to Asia and Europe”. It clearly relates me productivity and how I can
understand the way of explaining the growth in productivity. Due to advancement
in physical capital (tankers) required to transport oil to overseas, American
Oil Exports had achieved success in oil global Markets. Since, Exports of oil is increasing rapidly here in United States, it
will be much easier to understand Gross Domestic Product. It will help to rise
the GDP of United States in 2017 since the exports of Oil is doubling compared
to the last year. Also, here, due to decrease in price of oil, consumer surplus
will increase.

Claims

This article Claims that “Exports represent a relief
valve for U.S. drillers, who are ramping up production at a pace to surpass 10
million barrels a day, a new record, by next year if not sooner”. In my
opinion, the claims made in this article are valid as they seems legit. I
believe United States will ultimately reach its target since it has been
working hard for it. The taxes that citizens and firms here in States pay is
really high. The high amount of tax acts as the real income for government to
spend it to buy goods required to improve the oil production. Oil refineries
requires huge setup and also large amount of budget to establish. United States
high economy voluntarily help to rise the production of oil as expected by the
government. Also, physical capital as well as human capital directly help in
the growth of oil industries and its production. This article also talks about
“The U.S. still imports a lot of foreign crude, averaging 10 million barrels a
day last year, because it is the world’s No. 1 oil consumer. But that level has
dropped sharply in recent years”. Here, I can clearly understand how the
increase in production of oil here in States has led decrease in the imports of
oil from foreign land. The number of population that uses vehicles here in
America is increasing day by day which makes it to consume more and more oil.
But, the article claims this has gone down recently.

Weakness and Strength

The
strength of this article, it is short to read and understand and its simplicity
in words selection impressed me. It has properly supplied reasonable claims
sticking to the topic with valid reasons and data’s. On the other hand, I think
some reason are not much valid to the claims made in the articles. It’s says,
the consumption of oil is decreasing recently and I think it’s not in reality
as it claimed. Also, its descriptive article and I believe readers like me not
really like to go through such articles every time. If it had included easier
way of data presentation with proper graphs then it would be much easier to
critically analyze the article

Conclusion

The
article mainly gives importance to the oil exports and its reason behind the
doubling. Also, it has provided evidences for changes in the global markets due
to increase in production and supply of oil to overseas.

 

Reference:

https://www.wsj.com/articles/u-s-oil-exports-double-reshaping-vast-global-markets-1496833200?mod=e2tw