It is evident that when filling up at the gas station that the prices have sunk below

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1 Sample Student 1 Original draft English Composition II Spring 2015 OPEC original draft It is evident that when filling up at the gas station that the prices have sunk below what society is generally accustomed to. There are many reasons for this, and the outcome affects every industrialized country around the globe. The Organization of Petroleum Exporting Countries, or better known as OPEC, plays one of the greatest roles in ultimately determining the fate of not only the their own economies, but the world economy as well. OPEC was founded in 1960 with the objective of coordinating and unifying the Commented [IcP1]: Don t end with a preposition. I know what you re saying, but the construction is a clumsy. Commented [IcP2]: Just write Exporting Countries (OPEC) plays Commented [IcP3]: To what extent? Meaning, what are the three things we need to keep in mind or otherwise keep in mind? We need to know where you are going to go with this essay. petroleum policies of its Member countries and ensuring the stabilization of oil markets (Organization of Petroleum Exporting Countries 1). There are twelve member countries all located within the Middle East, Asia, Africa, and South America. The member countries are countries that are typically classified as key oil regions, and combined extract 81% of the world s oil (Organization of Petroleum Exporting Countries 1). The rich amount of oil member countries have has caused OPEC to become a powerhouse in the world market, which ultimately allows them to determine the rest of the world s oil prices. Commented [IcP4]: You can condense these into one sentence containing information from the 2 you have here. Commented [IcP5]: Soil can be rich in nutrients. An organization isn t rich in countries, even *if* some countries have oodles of money. Commented [IcP6]: BAM! Good phrasing here. I like that word. In order to understand what it happening in the world s oil market today and how OPEC controls oil prices, it is crucial to have a basic understanding of supply and

2 demand. Demand is how much people want a certain product while supply is how much of the product is available to consumers (Heakle 1). The rate of supply and demand determines the price of a certain good. The goal of any company is to make a profit, so they do this by manipulating supply and demand. The bigger the supply a company has of their product, the cheaper it is to buy. So if the demand for a product is low, companies will produce more of it, which will set the price low in hopes that it will attract more consumers to buy the product. The lower the supply a company has of their product, the more expensive it is to Commented [IcP7]: YES INDEED. Egad, some people don t understand supply and demand. Commented [IcP8]: Commodity is a better word here, based on how you ve written this sentence. Add whether the price goes up or down based on the demand. I know it should be obvious, but if you re having to explain supply and demand, you have to tell us the pricing. Commented [IcP9]: A company or OPEC? Now, here you explain supply and demand in more detail. Can you combine elements of this paragraph and the previous one to create one paragraph that s an appropriate length? The one here is fine in length, but the content is so closely related to the previous one that the reader might wonder why you split the information. Remember that by combine, I don t mean simply pasting this paragraph to the previous one. buy. If the demand for a product is high, companies will produce less of it to be able to set the prices high and gain more profit. And this is exactly what OPEC has the power to do. In the mid 2000 s, the global demand of oil skyrocketed, especially in China. This caused other countries to step in by using some unconventional alternatives, in addition to OPEC s normal output. For example, the United States started frackingextracting oil formations. Canada started heating oil sands with steam to extract crude (Plumer 1). At the time, the extra supply oil had little effect on the market because of all of Commented [IcP10]: I didn t even think about China! Good job. Commented [IcP11]: Bravo in giving us examples of alternatives. Commented [IcP12]: How the heck do people think of these things?? Good job. Commented [IcP13]: This paragraph has only 2 sentences, which means 2 ideas. the conflicts occurring in key oil regions. There was a civil war in Libya, Iraq was facing threats from the terrorist group ISIS, and the United States and the European Union were controlling Iranian oil sanctions. It is important to note that oil prices can change fastest than the fundamentals of supply and demand (Conerly 1) when looking at oil in a short time frame. So when these conflicts became subdued, it was right around the time that global demand, in the long term, was decreasing on top of the short term demand

3 decreasing. The excess amount of oil being produced led oil prices to quickly spiral downward. OPEC called a meeting in their headquarters in Vienna on November 27, Commented [IcP14]: Beautiful progression within this paragraph. Although some members, such as Iran and Venezuela, were against keeping production at the same level, the majority of OPEC members decided to not adapt to the situation. Their hope is to engage in a price war with non member countries, such as the United States, that are unconventionally extracting oil because their difficult methods will Commented [IcP15]: What does this mean? Is the decision not to adapt a term OPEC uses? Commented [IcP16]: Their meaning the countries, or are you referring to OPEC itself? If the latter, you need to use a singular form. eventually become unprofitable, thus causing oil supply to decrease and prices to shoot back up. There was one country in particular that pushed to keep prices the same: Saudi Arabia. In the 1980 s, the world faced a similar oil glut to today s. To combat the problem, Saudi Arabia decided to cut back on production in hopes of the prices rising again. However, it ended up backfiring on them. All of the members of OPEC had made a pact agreeing to keep production the same (like today as well). Members ended up cutting back on production as well as Saudi Arabia. But, the difference was that Saudi Arabia decided to do this too late and prices in Saudi Arabia just continued to decline Commented [IcP17]: Having today s just hang there is awkward. Commented [IcP18]: It meaning what? A plan? The country? Commented [IcP19]: Don t use a conjunction to begin a sentence. (Gamal 1). Now, Saudi Arabia has saved up 750 billion dollars in the foreign exchange money for deficits like the one they are facing today. This causes them to have no desire to cut production. It is predicted that the Saudi s might have to cut back on some of their Commented [IcP20]: Who is predicting? OPEC? Oil gurus? social programs they just instituted after the Arab Spring. Citizens in the kingdom have mixed emotions about losing these programs, which is stirring controversy within the people.

4 The decisions that OPEC has been making regarding the current oil glut have had already caused a variety of affects to occur in other countries around the globe. The United States has greatly benefited from OPEC s decision, but will also greatly suffer from this decision as well. For a majority of people, a drop in prices has had a great impact on their lives. In Commented [IcP21]: as well is redundant, because you already have has also. Again, just 2 sentences? current years, citizens have been learning to deal with the consequences of high gas prices. For example, there has been an increase more fuel-efficient vehicles, and a decrease in SUV s which has even caused dealerships such as Hummer to go out of business. Now however, there is a high possibility that SUV s will start to make a comeback. Also, now there is less money is required to be spent on gas. This allows that Commented [IcP22]: Increase and decrease in types, production, or sales? Specify. Commented [IcP23]: Again, types, production, or sales? money to be spent on other consumer goods, and this increase in the market will boost the economy. Although it may seem as if there could be no negatives to low gas prices, they can affect people in the wrong way. As mentioned before, OPEC is trying to drive US competition away in keeping oil prices low, which will eventually make it unprofitable for the United States to keep up. Some states where oil production is a big industry, such as Texas and North Dakota, are going to economically be hurt as the country will be Commented [IcP24]: Good. You re lining up the cons along with the pros in low gas prices. Commented [IcP25]: to keep up? Keep up pace of production? Compete as an oil producer? Clarify. turning to OPEC s cheaper oil rather than its own (Plumer 1). This will cause people in the industry to lose jobs because there is no need for their work anymore. An increase in unemployment will result in a decrease in consumption in these states. Economists estimate that the demand of oil will continue to stay low, based on the fact that there is no new invention of extraction method that would cause demand to Commented [IcP26]: Consumption of what? What do you mean by consumption Commented [IcP27]: Haven t your already discussed this in some form earlier in the paper?

5 rise. So, prices will continue to stay down if one is only looking at the demand part of the situation. Commented [IcP28]: 2 sentences. However, it is important to recognize that supply also is a price determinate. There are three steps involved in supplying the oil market- exploration, development, and production. These steps all cycle off of each other. Exploration today is not very prominent because of the excess oil the market has. Since the exploration has already been done, the United States, OPEC members, and other oil producing countries want to continue to develop these sites they have already found. So naturally, it would be logical for these companies to keep producing oil from these sites. It is likely that this current supply cycle will last about a decade (Conerly 2). There are so many factors that come in to play when it comes to the global market, and even more when specifically looking at the oil side of it. The past is in the past, so only the future can tell what is to come for oil prices. People can always predict Commented [IcP29]: As a ring of being cliché. what their future expectations are. But if OPEC were to make one policy change, it would be a game changer to everyone s expectation, either for the better or the worse. Commented [IcP30]: Don t begin a sentence with a conjunction. The ending is bleh and almost clumsy. Works Cited "About Us." OPEC :. Organization of the Petroleum Exporting Countries, Web. 18 Mar <

6 Conerly, Bill. "Oil Price Forecast: " Forbes. Forbes Magazine, 18 Dec Web. 18 Mar < Gamal, Rania El. "Facing New Oil Glut, Saudis Avoid 1980s Mistakes to Halt Price Slide." Reuters. Thomson Reuters, 14 Oct Web. 18 Mar < HeakleI, Reem. "Economics Basics: Supply and Demand Investopedia."Investopedia. Investopedia, LLC, 30 Nov Web. 06 Mar Plumer, Brad. "Why Oil Prices Keep Falling - and Throwing the World into Turmoil." Vox. Vox Media Inc., 23 Jan Web. 16 Mar <