Question

In GCC countries, the refineries lay much importance to heating oils till 1990. There is decline in the production over these years. What are the two major reasons for such decline in heating oils? How these decline in requirements are tackled?

Answer 1

Sol:

There is a decline in the production over these years because of the following two reasons:

1. Decline in demand due to rise in price

The demand for home heating oil declined, the oil price increased from roughly $1.50 per gallon beginning in 2000 to just over $4.00 gallon in early 2013. The price trend reflected the trend in the composite cost of crude oil acquired by U.S. refiners, particularly the crude oil price spike in 2008 and the precipitous price drop that followed in 2009.

2. Demand for Electricity

The demand for electicity has gone up since the start of 2000. Consumption and growth was recorded greatest in the most populous parts of the country like New York and Pennsylvania. These states saw a large decline in the demand for heating oil, suggesting that people switching to electricity may have led to the decline of heating oil usage.

To tackle this decline, the government authorized the National Oilheat Research Alliance( NORA), to develop projects for the research , development and demonstration of clean and efficient oilheat utilisation equipment. It was an a NPO consisting of heating oil suppliers.

The main fuction of NORA was to implement programs for:

1. consumer and employee safety and training

2. research, development, and demonstration of oilheat equipment, and

3. consumer education.