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It depends on the trends that are under observation. It is inelastic and may continue to be so in the near future. I am available for hire, should any Organization require services of an Economist for its Planning, Analysis & Research functions. Thanks.
Elasticity is basically change in quantity demand or supply in response to the change in price. if demand change more then price then it is elasticity is greater then 1 and elastic.
in case of oil demand is considered inelastic only ceteris peribus for a given consumer. Extended that to the market as a whole works for developed country with relative stable consumer market,but fails for countries experience rapid growth
While the oil supply becoming less elastic as new oil supplies comes increasingly from conventional oil
In economic terms, if a small change in price produces a large change in demand, demand is said to be elastic. The oil supply is becoming less elastic as new oil supplies come increasingly from unconventional oil. Elasticity is the term economists use to describe how much supply or demand responds to changes in price.
‘OIL’ has always been playing a game of Cat & Mouse in terms of being Elastic or Inelastic. My answer is a litle bit long, but it is worth reading :) Mr. Asad Bilal Rivi, who is a Economist might agree with my research answer !!!
Does any elder age specialist here, can remember the energy crisis of the 1970's ??? Prices climbed rapidly in the 1970's, soaring from about $3 a barrel in early 1973 to over $35 a barrel in 1980. They then took a long slide through the 1980's and 90's, falling to almost $10 a barrel in 1998 before rising again over the last decade, diving back and then spiking again.
The above price changes have been controversial; they are the inevitable results of shifts in demand and supply. Both the demand and supply of oil are relatively inelastic in the short run; changes in price have little impact on either the quantity demanded or the quantity supplied. Similarly changes in price do little to spur new supplies in the short run. Exploring for, drilling, and bringing new sources on-line can take many years. Since the quantities demanded and supplied change very little as prices rise and fall.
For many years members of the Organization of Petroleum Exporting Countries (OPEC) controlled most of the world's oil market. In the early 1970's, partly reacting to political turmoil in the Mideast, OPEC oil ministers voted to deliberately cut production. This resulted in surge for supply for oil and drove up prices. Because demand was inelastic, the price increase was significant. The higher prices OPEC countries received more than offset the lower sales and their oil revenues rose rapidly. In 1979 a bitter war between long-time enemies Iran and Iraq shut down more oil fields and caused additional price increases.
Demand and supply are far more elastic in the long run than in the short run. After oil prices rose, firms began shifting to less energy-intensive ways of manufacturing goods and services. Similarly, consumers started to conserve as well. They insulated homes heated by oil furnaces and shifted to alternative energy sources. More importantly, they began buying different types of cars. They gradually ditched the gas guzzlers they purchased in 1971 when fuel prices were not an issue and bought smaller, more fuel efficient vehicles. As we shifted from cars getting 12 miles per gallon to ones getting 28 miles per gallon, the demand for gasoline (and its price) began to fall.
Supplies adjusted as well. The increased prices of the 1970's unleashed a frenzy of successful new exploration and drilling. New oil fields came on line all over the world in places such as Mexico, Russia and the North Sea. Fields that were not profitable to develop when oil was $4 per barrel proved to be veritable bonanzas at $35 per barrel. The combination of conservation and new supplies gradually drove prices down until, in inflation-adjusted terms, they returned to 1972 levels.
Of course it did not last. Unrest in the Middle East, accentuated by popular uprisings in Tunisia, Egypt, Libya, Yemen, Bahrain and Syria refuelled speculative fears that lengthy civil wars across the region would destroy oil fields and shut down pipelines. As firms rushed to lock in supplies, demand surged and prices soared back above $100 per barrel. By May 2011 domestic gasoline prices once again approached $4.00 per gallon. Then in 2014 prices plummeted once again. Economic slowdowns in China and Europe caused part of the drop, but increased supplies, largely the result of new technologies being used in the U.S. and Canada, were the primary drivers. The price cuts have been a windfall to consumers across the world, but are wreaking havoc in countries such as Russia and Iran that rely on oil exports to prop up their domestic economies.
What now? Will the current low prices continue? Probably, not. Given the political instability in many major oil-exporting nations, coupled with inelastic demands and supplies in the short run, the roller coaster price rides of recent decades are likely to continue.
So, the conclusion is Oil is both elastic & inelastic depending upon the circumstances prevailing.
Full Agree with all expert answers
agree with answers ..................................
I agree with the answer given by Asad Bilal Rizvi Senior Economist & Researcher.
Sorry, I don't have any idea
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Thank you for the invitation
The oil supply is becoming less elastic as new oil supplies come increasingly from unconventional oi
As far as the elasticity of demand is concerned , the oil has an inelastic demand because so far in my opinion there is no close substitute for oil product as main energy source for the various aspects of activities in our life.
Therefor the consumers will continue to demand the same quantity regardless of price change .
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