Question

If a major new oil basin begins production via hydraulic fracturing (fraking) in the U.S. midwest, how would the following be impacted and explain?

a) Would the world demand curve for crude oil: Shift to the right, shift to the left, or stay the same

b) World supply curve for crude oil: Shift to the right, shift to the left, or stay the same

c) U.S. demand curve for crude oill: Shift to the right, shift to the left, or stay the same

d) U.S. supply curve for crude oil: Shift to the right, shift to the left, or stay the same

e) World crude oil prices: rise, fall, change little

f) U.S. crude oilprices: rise, fall, change little

g) World crude oil consumption: rise, fall, change little

h) U.S. crude oil consumption; rise, fall, change little

i) U.S. oil imports; rise, fall, change little

Answer 1

a) World demand for the crude oil will remain the same. The demand for the crude oil is very inelastic and stays the way it is doesn't matter the price increase or decrease.

b) World supply curve will shift to the right as more supply is added to the existing supply increasing the supply quantity.

c) Us demand for the crude oil will stay the same as it was. Just the source of getting the oil will change.

d) The Us supply of the crude oil will shift to the right as the quantity is increased because of the discovery of new sources.

e) World crude oil prices will fall as there is more supply than before.

f) US crude prices will fall as there is more supply now.

g) World crude oil consumption change little as the demand for crude is inelastic.

h) US oil consumption changes little. the demand for oil is inelastic.

i) US oil import fall. Now the US will produce the oil they needed in their home country.