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Energy Challenges and Dilemmas

Managing oil and gas globally

  • 3 things to know
  • A2 Unit 4

Overview

How storage helps manage seasonal variation in gas demand, three factors that determine the world oil price and why oil prices are so volatile.

What you need to know

Answer each one before you reveal it.

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Key term

How does oil and gas reach the consumer, how is seasonal demand covered, and why does the price swing so hard?

Key term

Explain why the supply of and demand for oil are geographically mismatched.

Key term

How is oil transferred from producer to consumer?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Explain why the supply of and demand for oil are geographically mismatched.

    Model answer

    The largest reserves lie in a small number of producing regions while the largest consumers are the industrialised and industrialising economies elsewhere.

  2. 2

    How is oil transferred from producer to consumer?

    Model answer

    Chiefly by tanker along established sea routes, and by pipeline where producer and consumer are connected overland.

  3. 3

    Give one advantage and one disadvantage of pipeline transport over tankers.

    Model answer

    Pipelines are cheaper and continuous once built, but they are fixed in route and vulnerable to sabotage and to political disputes with transit states.

  4. 4

    Why do countries hold strategic petroleum reserves?

    Model answer

    So that a sudden interruption of supply can be absorbed for a period without the economy or defence being compromised.

  5. 5

    Explain how storage helps manage seasonal variation in gas demand.

    Model answer

    Gas is injected into underground storage in summer when demand is low and withdrawn in winter when heating demand peaks.

  6. 6

    Name three factors that determine the world oil price.

    Model answer

    The balance of supply and demand, decisions by major producers on output, and expectations about future disruption or growth.

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