Analisys of demand and supply affecting Shell Oil Coursework

Analisys of film and supply affecting Shell Oil - Coursework patternThe effects of changes in the price and approachability of gods and services, which serve as complements to oil have had a great impact on the demand for Shells products. A good is as a complement when a rise in its price results to a negative shift in the demand distort for the good of interest. The rise in the maintenance costs has placed tremendous pressure on the demand for oil and affecting the price for the companys products. The price fall in shares for other industries that heavily rely on oil has had a great impact on demand for oil. The reduced profitableness and price wars among companies such as Tesco, J Sainsbury, and Marks Spenser reduces the demand for Shells products. Increase in price of engineering tools used in bear upon and root of oil have had a negative impact on the demand for oil (Mason, 2011). Shell can increase the price for its products and services to crosscut higher overhead cost s. A substitute good or service is as a substitute when an increase in its price results into a authoritative shift in the demand for good or service of interest (Cherunilam, 2007). The increase in the availability of alternative fuel sources such as solar energy has a negative impact on the demand for oil. ... The demand for Shells products is price sensitive (elastic) since a reduction in the price for Shell petrol will automatically result into an increase in demand. In the case of Shells products and services, the percentage change in demand is greater than the change in price. The effects of 2008 economic crisis have had negative impacts on the available income to most people in the UK and the rest of the world. This results into decreased availability of disposable income thereby lowering the demand for products and services (Kotler, 2006). An increase in the level of income can result in change magnitude demand for Shells products as people start spending more on luxuries s uch as travelling longer distances using private cars. This will result into increased demand for fuel. Changes in the companys operations can have remarkable impacts on the supply curve. The increase in cost of oil extraction due to the effects of economic recession is likely to lead to a shift in Shells supply curve. The cost of the refinery is a lively factor that causes a shift in the supply curve. The high cost of production has resulted into less supply and consequently fewer profits (Tanne & Raymond, 2010). The increase in the number of the companys own retail outlets is playing a major role in increasing the companys global presence. This results into controlling shift in the supply curve. Market failures and imperfections An externality is an impact resulting because of an economic activity that affects unrelated third parties (Maidment, 2002). An example of an externality is the recent Shells oil spill in Niger Delta, which affected the surrounding environment and affect ed the health and economic life of the nearby residents. An externality can