The paper "Energy Industry and SWOT Analysis for Ryanair " is a perfect example of a management assignment. The global energy demand has been on increase over the years. It is estimated that the world energy demand will be 50% higher than the current level. This is based on an annual growth rate of 1.6% (Filis, 2010). It is estimated that more than two-thirds of the energy demand will come from developing countries where there is high economic and population growth. Fossil fuels are the major world energy supplies and will be meeting more than 80% of the demand in this scenario (Narayan & Narayan, 2007).
The growth of natural gas demand has been driven by power generation overtaking coal. The transport sector is the single largest consumer of fuel (Yang, Hwang & Huang, 2002). The share for nuclear power has been on the marginal decline while hydropower demand remains constant. The current world energy resources have the capability to meet the growing demand. Despite this, there is a need for more oil reserves to ensure that peak production does not occur before the projected period (Narayan & Narayan, 2007). Main real-world demand and supply factors that influence the price of oil, including macroeconomic factors After four years of stability where the price per barrel was around $105, oil prices have faced a sharp decline since 2014.
Macroeconomic conditions play a major role in determining oil prices. For example, a sharp increase in oil prices is preceded by economic expansion and low real interest rates. The decrease in oil prices in some cases coincides with the global recession and high real interest rates.
This implies that monetary expansions and contractions have an effect on oil price shocks. For example, monetary expansion leads to positive oil price shocks. Monetary conditions influence demand hence prices through economic growth (Zhang, Fan, Tsai & Wei, 2008). Interest rates influence oil prices based on channels that are related to the opportunity cost of investing in real assets. The interest rates have a significant influence on the energy firms to hold their inventories (Blanchard & Gali, 2007). Also when there is a strong demand for energy and stagnant supply, the prices for oil rise.
The oil prices are based on the US dollar. A depreciation in dollar leads to an increase in demand for oil in the non-dollar regions. This makes oil less expensive using foreign currency. In some cases, dollar depreciation may lead to expansionary monetary policies in other countries.
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