El Niño And The Decline Of The Oil Industry

As prices begin their incline once again, many wonder about the recently dramatic drop in oil pricing. Oil is used for heating, gasoline, and electrical equipment that are known to be pretty expensive. What may seem beneficial for consumers is actually an economic problem worldwide. In the last few years, around 2008 to 2014, oil prices were at its highest peak. Since 2015, prices have reached a record breaking low, which is confusing and concerning to the public. Currently, a barrel of oil is selling in the high 30s range which is the lowest sale since 2003. There are many different factors that determine the price of oil. The overproduction, alternative substitutes, and natural effect of El Niño have the strongest effects on the declining

With all the competition, there are advantages and disadvantages that affect that many around the world. While the citizens are enjoying the easy access and price to oil, workers are being laid off, governments are losing large revenues and funding, and some smaller businesses are being shut down. Along with the competition of producing oil, there is competition between oil and its substitutes as well. There is a large variety of substitutes that can be used in place of oil, which is another factor for why oil prices have lowered. The two main uses of oil are for heating and transportation. When prices were high, families looked into other alternatives to perform the same job at a cheaper cost. Instead of using heating with oil, solar products, pellet and wood stoves, and firewood all became suitable options. Solar panels can be used to eliminate costs in both electrical and heating while still receiving the same performance. Stoves are a new source of heating for a house that only requires the user to purchase large amounts of wood or burnable pellets; both would cost much less than oil when prices were high. Lastly, the old fashion fire wood and chimneys are used to heat a single room at a cheap, natural source. On the other side, it is harder to find efficient forms of transportation that do not require as much oil. Citizens began taking public

El Niño is a climatic change that typically results in a warmer winter. In the winter of 2015 and 2016, weather was much warmer than usually and little to no snow made its way into areas of New England. Due to this natural factor, less money was spent on heating resulting in less of a demand in oil; this corresponds with a previous example explaining that demand was lower than supply. Because of El Niño, it seemed as if winter was completely wiped away. Alone, El Niño caused oil prices to drop a whole 20%. Even though no one can alter this climatic force, it definitely can alter the cost of