128
crude oil prices, the Islamic Republic of Iran missile testing, the risk aversion of
traders, and the massive sales of the dollar, and in particular the US financial crisis.
From January to May 2008, the price of oil rose by 30%, while at that time the dollar lost 1.2% of its value. Gradually, in 2008, with the fall in stock prices in the
American Exchange Hall, the crisis widened and all economic sectors of the United
States had been involved and led to the bankruptcy of many banks and institutions
so that at the end of this year, the United States lost 17 billion dollars in its inventory. Many economic analysts point to the recent rise in the financial crisis, along
with factors such as rising military spending, debt, the trade deficit, and factors such
as oil prices. In fact, rising oil prices have helped lower the dollar’s rate compared
to other international currencies, in particular the euro so that the price of dollars
dropped by 10% for the price of oil (Pour Ahmadi and Sadoughi 2010:156).
US Crude Consumption and Oil Price Volatility
In economics, there is a direct link between consumption and demand on the one
hand and prices on the other. That is, with decreasing demand, prices have fallen, in
contrast to rising demand which sees rising prices, with crude prices dropping
slightly below $100 a barrel. One of the factors that reduced the oil price in the
global market was the decline in demand and consumption of crude oil in the
United States.
Following the financial crisis, followed by a decline in economic growth in the
United States, demand for oil in the world’s largest consumer of energy fell sharply,
which led to a decline in oil prices. In January 2009, the average US consumption
of oil and oil products was 19.4 million barrels a day, another 4.7% less than in the
same period in 2008 (Pour Ahmadi and Sadoughi 2010:164).
This is also true for oil products such as gasoline. The volume of gas sales in the
United States has also fallen sharply and the price of the oil supply in the country
has now reached its lowest level in the last 5 years, but this has not been able to
increase the level of demand. The sales volume of gasoline in the third quarter of
2008 compared to the same period of the previous year was 11.2. The average price
per gallon of gasoline fell to $1.46 a barrel, down from 2.46 a year earlier (Pour
Ahmadi and Sadoughi 2010:165).
Oil price volatility has always had an impact on each of the actors in the global
oil market, especially in times of immediate oil price shocks, many actors have suffered and therefore demands mechanisms and methods to prevent oil crises, or to
minimize the effects. The implication is that fluctuations in the dollar’s rates in
recent years, and consequently in oil price changes, have led many players to persuade many actors to maintain the dollar and prevent fluctuations in this area. So
many countries have suggested the idea of using alternative currencies, especially
the euro (Pour Ahmadi and Sadoughi 2010:165).
Investigating the causes of oil price changes and modeling to predict its fluctuations, given its position in the economics of oil-producing countries, has always
4 George W. Bush Energy Diplomacy
crude oil prices, the Islamic Republic of Iran missile testing, the risk aversion of
traders, and the massive sales of the dollar, and in particular the US financial crisis.
From January to May 2008, the price of oil rose by 30%, while at that time the dollar lost 1.2% of its value. Gradually, in 2008, with the fall in stock prices in the
American Exchange Hall, the crisis widened and all economic sectors of the United
States had been involved and led to the bankruptcy of many banks and institutions
so that at the end of this year, the United States lost 17 billion dollars in its inventory. Many economic analysts point to the recent rise in the financial crisis, along
with factors such as rising military spending, debt, the trade deficit, and factors such
as oil prices. In fact, rising oil prices have helped lower the dollar’s rate compared
to other international currencies, in particular the euro so that the price of dollars
dropped by 10% for the price of oil (Pour Ahmadi and Sadoughi 2010:156).
US Crude Consumption and Oil Price Volatility
In economics, there is a direct link between consumption and demand on the one
hand and prices on the other. That is, with decreasing demand, prices have fallen, in
contrast to rising demand which sees rising prices, with crude prices dropping
slightly below $100 a barrel. One of the factors that reduced the oil price in the
global market was the decline in demand and consumption of crude oil in the
United States.
Following the financial crisis, followed by a decline in economic growth in the
United States, demand for oil in the world’s largest consumer of energy fell sharply,
which led to a decline in oil prices. In January 2009, the average US consumption
of oil and oil products was 19.4 million barrels a day, another 4.7% less than in the
same period in 2008 (Pour Ahmadi and Sadoughi 2010:164).
This is also true for oil products such as gasoline. The volume of gas sales in the
United States has also fallen sharply and the price of the oil supply in the country
has now reached its lowest level in the last 5 years, but this has not been able to
increase the level of demand. The sales volume of gasoline in the third quarter of
2008 compared to the same period of the previous year was 11.2. The average price
per gallon of gasoline fell to $1.46 a barrel, down from 2.46 a year earlier (Pour
Ahmadi and Sadoughi 2010:165).
Oil price volatility has always had an impact on each of the actors in the global
oil market, especially in times of immediate oil price shocks, many actors have suffered and therefore demands mechanisms and methods to prevent oil crises, or to
minimize the effects. The implication is that fluctuations in the dollar’s rates in
recent years, and consequently in oil price changes, have led many players to persuade many actors to maintain the dollar and prevent fluctuations in this area. So
many countries have suggested the idea of using alternative currencies, especially
the euro (Pour Ahmadi and Sadoughi 2010:165).
Investigating the causes of oil price changes and modeling to predict its fluctuations, given its position in the economics of oil-producing countries, has always
4 George W. Bush Energy Diplomacy