• 1973 oil crisis: Yom Kippur War

• 1979 oil crisis: Iranian Revolution

• 1990 oil crisis: Gulf War

•3 times of oil crisis also makes the oil prices raise dramatically.

•USA, Japan, got hyper-inflation.

•Finally, the global economic is turn into recession.

•In 1973 organization of Petroleum Exporting Countries (OPEC) do not allow these countries to export oil.

•USA inflation is over 6% and the followings year is over 10%.

•Global economic crust and industrial production is stop.

•At 1978 Islamic Revolution was happened.

•Inflation rate of USA is over 10%.

•Next year, the inflation rate is over 13%.

•Global economic is turn into hyper-inflation.

•Unemployment rate is mount up.

•In 1990, Gulf war caused the 3 times of oil crisis.

•After the Gulf war, the oil price reduces to the original price.

•Federal Reserve Bank of America takes some measures, e.g. Reduce the interest rate.

•Recent year, the oil price is increase to near US$68 which is thrice as before.

•Maybe the forth times of oil crisis and inflation is coming.

•Cause inflation.

•Purchasing power is becomes lower.

•2 times of oil crisis does not affect the exchange rate as like as the gold price.

•Political factors and economic development X oil crisis.

Current situation•Demand for crude oil is about 80 million barrels.

•Normally 81 to 97 million barrels of crude oil produce each day.

•Most countries is just producing at their normal capacity.

•Crude oil market: Supply > demand

•Big countries keep their oil reserves constantly.

•Supply does not affect the increasing oil price.

•How the market demands them?

•Even though oil price is surging, people are still willing to pay the price.

•People push up the demand on propose and as a result, push up the oil price.

•No people are willing to pay higher price for goods except those who still make a profit after all.

•If the price of the demand is high enough and huge in quantity, oil price would be pushed up.

•Unit together = Enough power.

•No country made a decision to deal with.

•Still willing to pay whatever the price:

1 .Increasing demand for oil.

2. Fear for the future.

The influence of the increasing oil price to the economic of the world is negative.

Increasing oil price make the economic growth of Petroleum Exporting Countries is less than the economic loss of Petroleum Importing Countries

High oil price will make the market of international finance have a large negative influence.

The stocks of Petroleum Exporting Countries will increase, but the stocks of Petroleum Importing Countries will decrease.

Example: some developing countries, such as India

High oil price will make the confidence of companies and customers decrease

High oil price will make the confidence of companies and customers decrease and increase the negative effect

But, increasing in oil price is not totally bad.

Advantages:

•Make the structure of world economic have adjusted.

•Advance the development of new power.

•Advance the skill of economizing power

•The Chinese petroleum industry has been the primary beneficiary

•Put a lot of pressure on the petrochemical industry.

•The petrochemical industry is working to decrease consumption of materials and management fees to cuts costs.

•The current domestic crude oil prices and refined oil prices have gone up with international prices.

•Because China's crude oil prices and refined oil prices became linked with international prices.

•China's aviation industry also facing challenges.

•The aviation industry's cost expenditures increased.

•Oil costs took up a greater share of the airline companies' business costs.

•Negatives effects aren't as serious as those in developed countries.

•The effect of the oil price increase on the agricultural, timber and fishing industry isn't very visible.

•Petroleum only accounts for around 20% of China's energy consumption structure.

From a long-term perspective, China's net petroleum imports increases every year, making China the country with the fastest growing demand for oil in the world.

Reasons of lightly increase of oil price in future 20 years:

•Reserves of the world’s oil still have a great quality.

•The demand for oil will be exceed supply.

•Restrictions

•Direct participation

Reasons for the widely increased in price of oil after 2020:

•The reserves of oil will became exhausted.

•The rapid development of many developing countries

•Make use of oil as “weapon”

•Production cost of oil will become higher

Consider the past experiments that fluctuate the oil prices:

•Social unstable climate or wars

•Low tide period

•The OPEC countries cooperate to control the oil supply

•Economic penalty

•Natural condition

•Oil companies controlled new energy development and the present of energy-saving system

•New energy development and the present of energy-saving system

Reasons of affecting the oil price

•Increase in demand of oil

•Political situation in the production regions

•Terrorist attack

Another factor that affects the oil price rise is periodic factor

Price cycle, market cycle, investment cycle, demand cycle and seasonal cycle

The demand to oil from the market is in three styles: consuming, investment and stockpile

Rapid rise of the oil price will affect the developing countries and the whole world economy, but the effect to the western countries is limited.

OPEC and Iran

Most of the western countries started the adjustment of the properties structure

Import diversity of the main consumption countries

Establish a huge reserve in oil

Highly rely on the sales of oil and ensure stable supply