Report Writing- Literature Reviews

Oil price in the world market has been increasing recently. This situation will also affect the cost of living of all people in the world due to the increase in fuel prices and transport charges also. Lois Parshley (2008) comments that the rising price of oil isn’t just hurting consumers at the pump but also changing the way globalization work. Higher prices are upsetting the global supply chains that until now considered profit more important than geography. The rising price of oil caused the rising of shipping or transportation cost. The increased of this cost will lead to the largest barrier to global trade today.
The price of oil in the world market increase rapidly. James L.Williams (2003) described the potential for an energy crisis has never been higher. Oil prices have recently exceeded $30 per barrel and they may continue to increase. The disruption of Venezuelan oil supplies has increased the US dependence on Middle Eastern oil and made the US more susceptible to supply interruption. With the crisis in Venezuela, the capacity of OPEC to meet any additional supply interruption is limited and a war with Iraq would put OPEC at its limit. Any energy crisis in the near future will hinder President Bush’s efforts to stimulate the economy through tax cuts and other fiscal measures. An energy crisis could cause a recession, inflation, and higher unemployment. The same indicators and warning signs that existed prior to the energy crises of 1973 and 1979 exist today: a political crisis in Venezuela that halted most of the Venezuelan oil exports, the threat of war with Iraq, stocks at their lowest level in twenty six years, imports nearly record high, more concentrated imports than ever, and low upstream expenditures. However, the current problem is even worse than the previous two energy crises because, unlike the 1970s, we are starting from a case of low economic growth. The massive stimulus package that is planned by the Bush administration could exacerbate the situation by increasing the demand for oil. There are a few factors that need to be considered for this situation. The factor is not only focus on supply of petroleum but also affected by other factor such as the price of crude palm oil. Eric Watkins (2008) , identify speculation is contributing to higher world oil prices, not imbalances between supply and demand, according to Saudi Arabia's former minister of oil, Sheik Ahmed Zaki Yamani, in a published interview. "Traders buy and sell depending on speculation and rumors, not supply and demand," he told Japan's Nikkei newspaper. "That is why even though Saudi Arabia announced increases in production—300,000 b/d and 200,000 b/d—oil prices in the market did not respond well. On the other hand, prices went so high on reports that the US might attack Iran. So much money is flowing into the market; it's almost like gambling."
Alan Reynolds (2005) , the price of crude didn't rise from $12 in early 1999 to nearly $60 because the world suddenly ran out of oil. On the contrary, the world supply of petroleum has risen 10 percent since then, according to the International Energy Agency (IEA), from 65.8 million barrels a day in 1999 to 72.5 million in 2004. Cambridge Energy Research Associates estimates global oil production capacity will increase at least twice that rapidly over the next five years by as much as 16 million barrels a day by 2010.
Jason Brudereck(2007) , said that the price of oil continues to skyrocket to almost double the $50-per-barrel price that it hit in January, opinions about what this will mean for consumer vary as much as the recent daily performance of the stock market. Most experts agree the immediate effects on most consumers be too severe, apart from a few dimes more per gallon of gasoline and increases in the costs for heating oil, airline tickets and some groceries. The rising price of oil has yet to be factored into costs for many goods and services. But it soon will be, said Brad Proctor, founder of gas price watch.com, which tracks pump prices throughout the country. Nationwide, the average residential heating oil price increased 15.7 cents last week to reach $3.11 per gallon, a boost of almost 73 cents or 30 % over this time last year, gasoline cost may reach unprecedented level. In Berks County, the average price for a gallon of unleaded gasoline hit $3.03 on Thursday, up more than 40 percent from a year ago, according to AAA. Diesel reached its highest recorded price in Berks on Thursday at $3.46, or 32 percent more than the same day last year.
In Malaysia, the increasing in oil price are become a big issue that the government has to face. This situation will give big impact to the government consumption, according to the author of the website www.wikipedia.org (2008) Malaysia has spends US$14 billion subsidizing gasoline, diesel and gas each year.[14] Effective June 5, 2008 gasoline prices increased by 40% to RM2.70/litre (US$3.30 a gallon), from RM1.92/litre (US$2.32 a gallon). Diesel prices rose by RM1.00/litre to RM2.58 (US$3.04 per gallon), a 67% increase. It was announced that price increases were planned to bring fuel prices in line with global market cost, suggesting that it may hit US$3.80 per gallon by August.
This increment also will affect the consumption of Malaysian citizen especially household, worker and student. The poverty will increase from time to time according to Tan Sri Ramon Navaratnam (2006) , The Centre expects that the price increase will bring about an immediate and possibly significant rise in the number of poverty households, as well as increase the economic burden of vulnerable groups, especially in urban areas, all over the country. The official poverty incidence data has been previously criticized for being unrealistic and for under-estimating the number of poverty households and the Centre expects that the fuel price increase will undoubtedly impact adversely on the poverty statistics and projections.
Todd Litman (2008) , described fuel prices are an emotional issue. Even at lower prices many motorists feel they pay more than is fair. There are frequent demands for investigations into fuel prices gouging, and popular campaigns to promote cheaper fuel through public policies and consumer boycotts. As a result, consumers, consumer groups and policy makers are wondering how best to respond to rising fuel prices. Which policies are considered optimal depends on how the problem is defined. If the only concern is consumer unaffordability (excessive financial costs to purchase important goods and services), then price minimization policies may seem sensible, but considering other impacts, such policies are undesirable because they impose costs elsewhere in the economy, and increase total fuel consumption and vehicle travel which exacerbates other economic, social and environmental problems. When all impacts are considered, solutions that increase transport system efficiency are usually considered best.
Thanneermalai Lakshmanan (2008) describes that despite the gains by the opposition and promises to reduce the fuel price in Malaysia, it will be hard to do so as there are several external factors in play as well. He says that nowadays our oil consumption gradually went up due to an increasing population and growing economy; and this is expected to continue rising. At the current rate, we could become a net oil importer as early as 2009 or as late as 2011. After exploring many possibilities, Lakshmanan suggests that Malaysian people should live more simply – drive less, walk, cycle and car-pool more. Petition our new and eager MPs to improve public transportation, improve our railway system, and rebuild neighborhoods to ensure most amenities are within walking distance, etc.
The Star Online(2008) , higher fuel and transport prices were identified as the main cause of increased cost of living for Malaysians, according to an online opinion poll conducted last month. Half of those polled by local survey company Pollster Sdn Bhd on the topic “Costs of Living” said an increase in their costs of living was caused by higher petrol prices and transport charges. Some 34% of respondents identified global economic volatility as the cause of higher living costs, Pollster analyst Goh Leng Chua said. He added that 9% of those polled identified higher food prices as a main concern while 5% felt that indiscriminate pricing by sellers and traders was to blame.