5. Here is a softball: On the demand side, the economies of Europe and developin

Question

5. Here is a softball: On the demand side, the economies of Europe and developing countries are weak and vehicles are becoming more energy-efficient. So demand for fuel is lagging a bit. Show what is happening the market for oil being described above. You have to be careful to make sure you understand and can justify what it is that is causing the change in global oil markets. That is, you need to clearly identify and justify which "category" (or catagories) of shock the above quote is describing a.

Explanation / Answer

According to above statement that demand for oil in the Europe and other developed countries is weak as the vehicles in those countries have become more energy efficient.

There are two cases for this reason for decrease in demand for oils.

Case1 : Due to improvement in technology now a days all the Governments are stricty prohibiting pollution and fuel consumption to a greater extent. SO the manufacturing companies are bring more energy efficient vehicles which will use ahve less fuel consumption than there previous models. These models are highly successful in US and many other countries. But this type of vehicles affect on oil demand is very less

Case2: Green vehicles are the new vehicles that manufacturars are trying to develop like Electric cars which only run on batteries. Thus these developemnt and usage of vehicles will also reduce the oil demand as it consumption will be reduced drastically.

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