Literature Review

It has been a debate on how well the devotion of the financial analysts and economists in determining the different impact of oil due to the price change. On the part of the analysts, they provide successful effort and method on how to treat the changing prices of oil. Through their initiatives, the economies can pulse the international market in a wide array of opportunities. The anticipated prices created a room for adjustment in for the businesses. But there are increasing number of constraints that making it difficult for the professionals to assess the changes and in return, affecting the behavior and the consistency of the performance of the economy. The inconsistency in the economy is considered as the first impact of the oil prices ( 1991). The prices of oil in the world market are a train of different consequences. Domino effect might appear and the needs for adjustment are anticipated, affecting the wages of the workforce, fare and transportation, and prices of the commodities. Higher prices lead to inflation, input costs, reduced the demand in utilizing the oil while exploiting the other inadequate resources, and lowering the oil importation. The taxation and government expenditures are also affected of the prices changes (2004; 2006). There is relative impact on the relative value of the currency. The exchange rates affect oil prices and there is a significant short run effects on the price of oil movements in the exchange rates (2006). If all of the impacts stayed in the economy, there is no doubt that there will be a declination of the economic performance due to the oil prices. Other studies stated that rising oil prices stimulate the economic growth in the exporting countries while retarding the importing economy and it is also expected in the declinations of the oil prices (2004; 2005).

Methodology

Comparative case study method is the applied methodology because it is simply a case sensitive topic. Different models and measurements are needed in order to satisfy the main problem of the study. Enclosed in the past literatures are the statistical and economic theories that are all essential in building the different perspectives. It is very advantageous for the study to base all the exploration on the case studies because there are macroeconomic environment that are past of the measurement. The economy is comprised of different index that are also involved in the prices of the product that provides specific description on how the consumers, businesses, investors, and the government react in the uncontrollable changes of oil and other related products.

Analysis and Conclusion

The economic stimulus in providing oil through importing is very common. Therefore, there is a depressive effect of higher prices on economic activity in the importing countries. The importers are only following the prices of the exporters. If the prices became higher than expected, there would be a loss of consumer confidence for they are striving to look for other options. The responses are different but as long as the oil prices are high and unstable, the economic prosperity of oilimporting countries, especially the developing countries will remain at risk.

References:

Birol, F., 2004. Analysis of the Impact of High Oil Prices on the Global Economy. International Energy Agency. [Online] Available at:

http://www.iea.org/papers/2004/High_Oil_Prices.pdf. [Accessed 04 Feb 2010].

Dawson, J., 2006. The Effect of Oil Prices on Exchange Rates: A Case Study of the Dominican Republic. The Park Place Economist, Vol. 14. [Online] Available at: http://www.iwu.edu/economics/PPE14/Dawson.pdf. [Accessed 04 Feb 2010].

Iledare, O., & Olatubi, W., 2004. Effects of Changes in Oil and Gas Prices and State Offshore Petroleum Production on the Louisiana Economy, 1969-1999. Coastal Marine Institute. [Online] Available [Accessed at: 04

http://www.gomr.mms.gov/PI/PDFImages/ESPIS/2/2997.pdf. Feb 2010].

Landler, M., 2005. With Gas Prices Already High, Europe Is Less Rattled by Jump. Social Education, Vol. 69, No. 1.

Pariser, D., & Titard, P., 1991. Impairment of Oil and Gas Properties: Is a Ceiling Test Needed for Successful Efforts Companies? Journal of Accountancy, Vol. 172, No. 6.

Saxton, J., 2006. Energy Process and the Economy [Online] Available at: http://www.house.gov/jec/publications/109/energy01-26-06.pdf. [Accessed 04 Feb 2010].

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