Chapter 2 Blog

“Oil prices slide a day after climbing on talk of further OPEC cut, Nigeria unrest“, The Canadian Press, Nov 7, 2006

As oil prices is slowly decreasing only after the increase of oil pricing due to intense situation happening in Nigeria. In Nigeria, threats of violence made by the armed protestors, there were oil workers who was kidnapped or held hostage in the southern oil region of Nigeria. An American and Briton was also kidnapped and released by the militants because they were employed by a Norwegian firm working with Chevron Corporation in mapping petroleum deposits. All these events have caused Nigeria’s oil production of 2.5 million barrels per day down to 1.875 million barrels a day. Militants continually invaded different oiling stations and forcing the workers to shut it down. Even though with the oiling stations being shut down by the militants, OPEC themselves also plans to decrease oil supplies by 1.2 million barrels per day. As said by the president of OPEC Edmund Daukoru, who is also Nigeria’s oil minister, “oil cartel may need to further cut its output, but that it doesn’t have a specific price floor or band that it wants to defend”. Daukoru also commented on the supplies of oil barrels each day, “The Market is clearly oversupplied.” On November 1, OPEC has decided to cut the production of oil supplies; however, we yet have to see what effect it will do to the market.

Relations to chapter 2 – “The Operation of a Market”

This article relates closely to chapter 2 where we talk about mainly supply and demands. As the prices of oil change dramatically over months from a peak height of $78 a barrel in the summer time to about $57 to $61 a barrel over the past month, it was affected by many different factors. During the peak times, many people choose to go out and usually they use a car; therefore, leading an increase of gasoline usage and the number of buyers causes the demand to go up. For gasoline, there isn’t really a substitute product for it; except for some cars that uses diesel or hybrid cars. For supply, the price increased due to the situation in Nigeria because of less quantity supplied, the price will rise. As the president of OPEC say that market is clearly oversupplied, by decreasing the supply, the price would raise hoping that it will reach the price they’re hoping for.

Chapter 1 Blog

"Go west...to get rich", Toronto Stars, October 31, 2006

this articles refers to advice of getting rich or at least a bigger pay raise. During the past years, in the Western parts of Canada, economic growth for provinces was recorded. According to a survey conducted by the Conference Board of Canada, workers in the western provinces, especially Alberta will receive the biggest pay raise in 2007. Furthermore, the shortage of workers in Alberta for the oil and gas industries has further pushed the pay raise for the talented workers. Most of the workers will be expecting a pay raise, with the oil and gas sector expecting a 6% increase and with the telecommunications and the communication expecting the least with a 3.2 and 3.0% increase. Some companies differ from a pay raise of 1 - 30% pay raise to keep talented workers in the company. Even though this might be hard on some companies, but it’s worth it.

Relation to Chapter 1 - Introductory Concepts

This relates closely to what we had learnt in chapter 1. As the gas and oil sector receive a better pay raise, it is because they don’t have enough workers working for them. As there are less and less skilled workers, the demand and the price companies are willing to pay for a worker is increasing. As we can say, skilled workers in the gas and oil sector are scarce. So it would be worth it if someone wants to plan on working in the gas and oil sector. We can also use opportunity costs to calculate that is it worth planning a future career in the oil and gas sector. One of thing major things that Canada is missing right now is the need of skilled workers. The trades is being more attractive with its high pay; therefore attracting more skills people. This will definitely have a positive effect on the market. With more skilled workers, there would be more people employed and less competition for other business sectors. This would help reduce the amount of people that are unemployed and improve the living standards for people around the country; therefore, leading a better economy throughout Canada where everybody is benefitted.