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Economics Assignment On Oil And Gas Industry In Australia

2 Introduction The Australia industry and community benefitted themselves with the low price of electricity and gas for a prolong time. However, in the present economics assignment, the steep increment in the price of gas and electricity has surprised the industrialists. The increment in the prices of electricity and gas has not only enhanced the competition on the international scenario but even forced them to increase the cost due to which immense problem is faced in terms of productivity and efficiency. The increment in prices has not influenced the standard of living of local people but also created immense difficulties for the heavy industries. The discussion on the problem will be dealt with the help of demand and supply mechanism. Further, the discussion will spread to energy policy framework of Australia and the decision taken by the department responsible for the same. The changes that happened in the energy sector will be discussed in the light of problem created by the high prices. The increment in the energy charges has not only led to huge competition between the large industrial consumers but also enhanced the problem due to the increment in the consumption charges of electricity (Robertson, 2019). Beyond question, energy is one of the most important elements that is required in every product and service and influences every business. Analysis The price of any product is based on demand and supply function. We can also say that the price is set in this economics assignment based on the product price at a given quantity and the purchasing power of people demanding such good. In the diagram given below the ship from D1 to D2 shows an increase in price and quantity sold. The quantity of product sold and produced is highly influenced by the scarcity of energy and increase in price. If energy is scarce and they are obtained at a higher price then there will be a reduction in the production of such goods and also the wages of workers will be reduced. To deal with the high energy cost, some Industries located in Australia has started purchasing goods from other countries. This is also shown in the diagram provided below. This process will have a huge impact on countries that have a low wage level as it would decrease the wages of workers who are not very skilled and are on the verge of finishing their education. If the age of the workers is less they won't be able to purchase goods which have been made using energy products. This demand deficit on the part of curse we lead to the fall of commodity prices like oil. In the long run, the prices can even fall below the production cost. Impact on the Australian economy that is heavy industry On carrying out proper economics assignment research, it was found that there was a permanent increase of 10% in the electricity generation prices as well as the domestic gas. This led to the fall of GDP of the country by 0.46 percent. Later it was studied from the economics assignment that if there was an increase of 25% in the prices of electricity and domestic gas then there would be a decrease of 27% in the plastic, rubber, chemical industry of Australia. This will have a huge impact on the country and its economy because there would be an economic loss of 19 billion dollars. Such a huge loss will surely impact the population of the country badly. In Australia, the most popular company engaged in producing and manufacturing steel is known as BlueScope. The two major components required in the electricity and gas industry is wire manufacturing as well as the production of steel products. There are about 6500 people who are employed in this company. The company also has various manufacturing plants that are located in Victoria, New South Wales as well as Queensland. The company collects 70% of its revenues from domestic sales which are engaged in the building and construction sector. As per the reports it has also been observed that the energy cost which is paid by the company in the US is much lower than what it is in Australia. As per the economics assignment it was expected that the electricity cost would go up twice in the coming 2 years which in absolute terms amounts to 54 million dollars. So, we can conclude that the increase in energy prices is creating a used pressure on the heavy industry by increasing its cost of production. Energy is required by the manufacturing sector when compared to a nonmanufacturing sector or a domestic sector. The industrial sector can be further categorized into energy-intensive manufacturing and non energy intensive manufacturing. The total fuel consumed by industry is highly dependent on the technological as well as economic development that is happening in various regions and countries (Sabateir, 2016). The industrial sector uses energy for many purposes which further increase the cost of the finished products. An increase in the price of the product is always considered to be negative because it harms the customers of the product. It is the most common fact of commerce that the customers are satisfied when they are provided best quality product at the most reasonable price (Braeutigam, 2010). The companies in this sector used an economics assignment model to determine the impact of rising energy prices. These economic model not only help in anticipating the economic effects on a particular country but it also helps in finding out the sustainability of these increasing prices of energy cost. Two different scenarios were studied by the economist. The first scenario is a 10% increase in electricity price whereas the second scenario was a 25% increase in electricity price and domestic gases. These increasing prices would have a great impact on the domestic market because the exports of the country will be badly affected. It is expected that the company might observe and unstable situation in an economy before if the supply of electricity and the consumption of gas is not balanced properly (Cairney, 2011). To keep control over the manufacturing cost various proper models are needed to look upon the consumption of raw materials. The sudden increase in the prices of electricity which has been causing problems in the manufacturing industry was followed by unnecessary interference by the state and Federal government. It was observed in this economics assignment that this problem was accompanied by a fall in the efficiency and quality of the acids that we use in the production by the companies. The inflation in the prices of electricity and gas not only lead to a change in demand but also various seasonal changes were observed. There was a decrease in demand for the goods because of which a company's seasonal business was badly affected. It is the basic function of every production house to match its demand and supply by using minimum labor and resources most optimally and getting maximum revenue. The company needs to match demand with its supply because it would help them to see the resources which are scared and are getting expensive day by day. As per this economics assignment a company can improve its efficiency by updating its machines and technology rapidly. A New Machine always reduces resistance which will help them to save electricity. The company might have to work according to a particular model if there are an unpredicted demand in the organization for certain products. A company can reduce its cost of production by using renewable resources as its raw material because it is a source of energy which can be obtained at a low cost (ECTL, 2019). If a company improves its technology then the price of non-renewable source of energy will fall and along with the efficiency by which the production is carried out will increase. The most common problem of producing energy using wind and solar energy is that the total amount of energy produced cannot be predicted and it is very fluctuating. This issue can be resolved by introducing large batteries and pumping hydro facilities which will help in a large-scale storage operation. However, the development of economics assignment mechanism encourages the company to be eco-friendly which will also affect the cost of the products. An eco-friendly product also shows that the company is very responsible towards the society and the environment which gives a positive impression of the company (Swoboda, 2019). Australia should take certain steps to reduce the price of energy in the long run because a major industrial sector of the economy will be affected because of this inflation. A company should also strive to maintain its carbon emission level. The other policies that are set up by the US revolution will help in improving the infrastructure facility and would also help in reducing the energy and gas prices which are used by the industry and domestic sector (ECTL, 2019). The national energy guarantee will appoint a marginal producer has allowed providing a uniform price auction in which all the builders will be provided a chance to give a market-clearing price. It becomes very difficult to provide energy at a low price because it is very important to generate energy through wind and solar power (Electric, 2016). Other factors remaining constant, the low-cost technology that has been introduced in the market a shift in the supply curve towards right it as the resources have become cheaper. No matter what it is very important for all the companies in the industry you understand the relevance of using renewable resources of energy. The obsolete technology and machines should be removed and an improved Technology and machine should be adopted by the company to improve its efficiency and reduce the cost of production for the company. It is a known fact that if the cost of raw materials increases then the price of the finished product also increases. This will increase the price that has to be paid by the consumers which will discourage them to use this product and switch to another. A company should always try to reduce its cost of production so that it can provide the product at a reasonable price to its customers and provide them satisfaction (Electric, 2016). The availability of resources is always scarce, so a company must use its resources in an optimum manner. If a company fails to do so then it will increase the price of the product which will further affect the profitability of the company in the long run. Every company should focus on satisfying its customers along with earning profits. Conclusion Heavy industries present in Australia will face immense challenges owing to the disturbance in the demand and supply of energy. Hence, it has become difficult to have a control on the cost of production. With a sharp increase in the prices of energy, the price of production has increased to a great extent thereby the production costs too have surged high. It is one of the major challenges for Australia because the economy depends on the functioning of the heavy industries. Hence as per this economics assignment, the regulators must look into the matter and device mechanism that will enable to maximize efficiency with the help of new product and processed. Considering the overall discussion and the total trend, it can be commented that an integrated solution is the need of the hour. This will helps the heavy industries to perform without depending on the energy. This will create beneficial result and help the heavy industries to flourish without depending entirely on the energy. Thereby, the government and regulators must ensure that the privatization of the state government owned electricity networks must be done, alteration should be introduced to the policies of the environment that influences energy costs, deregulation of the retail price and establishment of reliability standards, etc. will create positive yield for the heavy industries, as well as entire economy as a whole. Economics assignments are being prepared by our economics assignment help experts from top universities which let us to provide you a reliable assignment help online service. Reference List AIP. (2018). Facts About Petrol Prices. Retrieved from Braeutigam, R. (2010) Microeconomics (4th Ed.). Wiley. Cairney, P. (2011). Understanding Public Policy: Theory and Issues. London, Palgrave Chester, L. & Morris, A. (2016). A new form of energy poverty is the hallmark of liberalized electricity sector. Australian Journal of social issues, 46(4), 435-459. DOI: 10.1002/j.1839-4655.2011.tb00228.x ECTL. (2019). Gas prices hit 10-year high. Retrieved from Electric, S. (2016). The changing face of Australia’s Heavy Industry. Retrieved from: Fleetwood, S. (2014). Do labor supply and demand curves exist?. Cambridge Journal of Economics. 38 (5): 1087–113. Doi:10.1093/cje/beu003 Freedman, L. (2013). Strategy. Oxford University Press Janda, M. (2018). Oil price rise hit economy but KNG, coal exports soften the low: HSBC. Retrieved from Janda, M. (2019). Gas prices will rise and there is not much we can do to stop it. Retrieved from Mankiw N., Gregory and S and William M. (2011) Macroeconomics. Canadian ed., 4th ed. New York: Worth Publishers Mankiw, N.G. and Taylor, MP. (2011). Economics (2nd ed) Andover: Cengage Learning Rauch, P., & Gronalt, M. (2011). The effects of rising energy costs and transportation mode mix on forest fuel procurement costs. Biomass and Bioenergy, 35(1), 690-699. DOI: 10.1016/j.biombioe.2010.10.015 Robertson, B. (2019). IEEFA update: The staggering cost of gas in Australia. Retrieved from Sabateir, P. A. (2016). Analysis of the Policy. Comparing Government Activity Swoboda, K. (2019). Energy prices—the story behind rising costs. Retrieved from parliament/parliamentary departments/parliamentary library/pubs/briefingbook44p/energyprices Get Top Quality Assignment Help and Score high grades. 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Subject Name: Economics

Level: Undergraduate

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