Question

“US oil prices turned negative for the first time on record on Monday April 20th, 2020 after oil producers ran out of space to store the oversupply of crude left by the coronavirus crisis, triggering an historic market collapse which left oil traders reeling.” (The Guardian, April 20th, 2020)

On April 21st, 2020 the US president Donald Trump tweeted: “We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan, which will make funds available so that these very important companies and jobs will be secured long into the future!”

What factors or government policies do you think will help the price of oil to go up?

Answer 1

Answer:
Factors and policies that can help in keeping the oil prices to go up are as follows:

• Government should have proper policies within the country to cut the supply of oil when its demand is less so that price is maintained and oil companies should not go in losses.
• As oil is an international commodity so special treaty should be kept with various countries which include Russia and OPEC countries to cut supply of oil when its demand is not there to maintain the prices of oil in international market.
• Government should create bigger reservoirs to store oil so that in hard situation it can be used without decreasing the price below a given threshold.
• Contract of supplying the oil for as long as next 1-2 years should be taken in advance which also helps in maintaining the price of oil at a stable level.

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