Sinking deep into a profoundly-complex framework of economics, no one can fail to note that it gravitates largely towards the relationship of production and distribution with reference to commodities trades being placed in the market. Of all the concepts of economics, it would be reasonable to place special emphasis upon supply and demand, market structures, elasticity, inflation, and unemployment. As a matter of fact, the factors are likely to have different effects on the economy and may be tightly interrelated with one another or exist independently.
The following paragraphs will centre around the article entitled “Crude Prices Sink on China Slowdown Concerns” with a view to shedding light on its four key points. Sure enough, the main focus will be on investigating into the oil supply and demand, which in turn would create a platform for getting to know the extent to which the given economic concept could affect America’s economy.
Throughout the abovementioned economic article, there is a heavy emphasis on getting to the bottom of detrimental effects that resulted from the decline in oil prices worldwide. In fact, the article makes stress upon illuminating the negative impact of falling oil prices through the prism of China’s economy. Based on the article, the oil prices fell to US 38.24 a barrel, the lowest since the last decade. From Krauss’ perspective, “the oil industry has experienced its deepest downturn since at least the 1990s” (2017). As per numerous suggestions, the prices have reduced largely due to the increased supply of oil on the global scale. As such, the world has seen the drop in oil prices; consequently, Western powers are faced with the need for living with the reality of much lower oil prices. Being forced to export oil at lower prices contributed negatively to world’s economy; the thing is, selling oil at a price below the market price has lowered financial revenues received in the oil and gas sector. According to CNBC News, the oil prices have fallen by nearly 6 percent; this gives reasonable grounds for submitting that America is at the critical moment in the history, the time when the nation needs to prove the ability to halt falling oil revenues. It is high time to handle problems arising from oil price decline that “has been wreaking havoc
on the industry to the point of making it unprofitable to drill for oil in the United States” (Russell, 2016). As previously mentioned, the article provides an insightful reflection upon the increased supply of oil on a worldwide scale. Clearly, the growing oil supply was affected by the slowdown of China’s economy.
It is imperative to understand that China experienced a colossal economic drop since the last ten years. Until recently, Western powers conceived of China as a locomotive of the world economy. When it came to China’s slowing economy, central banks could not but respond by raising concerns with regard to substantial consequences for all sectors of the economy. Exposing the truth in respect of China’s 2015 stock-market plunge posits as another central claim that the article runs over. In regard to CBCN newscast, stabilizing oil prices could be reached through upholding an emergency OPEC meeting. The last claim that “Crude Prices Sink on China Slowdown Concerns” conveys is that raising oil production does make sense against the background of today’s demanding environment. The focus here lies in arguing that crude oil production will continue to play a significant role regardless of a recent Chinese economic slowdown.
When addressing the ways the concept of supply and demand could affect the U.S. economy, it is not an exaggeration to say that they are many. The law of supply and demand should be referred to as a key model that America’s economic activity rests upon. The two impact one another and determine prices of consumer goods and services. Yes, supply and demand represent two forces that can be noted with shaping the U.S. current economic environment. In concrete terms, supply incorporates both labour and natural resources. Personal consumption shapes nearly 70 percent of America’s economy. The ongoing recession emerges to be the major factor that constituted high rates of unemployment. The masses became discouraged of seeking jobs. As a result, one in three Americans is in or near poverty; as many experts reiterate, rising inequality of income and wealth needs to be viewed as the fundamental reason why the current America’s economic situation deteriorated to a great extent. The concept of supply and demand must be given a serious consideration especially within the context of China-led global economic slowdown; it cannot be overstressed that any disregard for an economic model of price determination can only jeopardize the chances of keeping the economy to the long-run growth path.
In sum, the article being discussed should not be underestimated from the perspective of bringing many thought-provoking points. The article makes a lot of sense, particularly in the way it explicates the relationship between China’s economic downturn and dropping oil prices. From my standpoint, there is no reason to disagree with the economic article identified, for it does provide an objective and unbiased rationale. In reviewing the article, I see that China continues to be the critical component of global growth today; more importantly, by immersing into the key points that the article delivers, it comes to light that the fear of instability constitutes the major step towards structural policy changes in the world economy.
- “Crude prices sink on China slowdown concerns.” (2015, August 23). CNBC News. Retrieved from http://www.cnbc.com/2015/08/23/us-crude-dips-to-around-40-on-demand-concerns-supply-glut.html.
- Krauss, C. (2017, 2017, June14). Oil Prices: What to Make of the Volatility. The New York Times. Retrieved from https://www.nytimes.com/interactive/2017/business/energy-environment/oil-prices.html?mcubz=1
- Russell, K. (2016, July 29). How Oil Prices Are Falling Again, Explained in Four Charts. The New York Times. Retrieved from https://www.nytimes.com/interactive/2016/business/energy-environment/oil-price-supply-demand-imblance.html?mcubz=1
