Economic, Environmental and Political Impacts on Crude Oil Price Volatility

Abstract

Crude oil, as one of the most important commodities in the world, accounts for a consumption rate of approximately 75 million barrels a day, serves as the raw mate- rial for over 1000 finished products and constitutes about 70% of national incomes to the world economies. Without a doubt, the unstable oil prices have negatively impacted strategic investments, particularly on U.S. firms as this thesis will demon- strate. Strategic investments are critical importance in a firm’s procedural decision- making as it constitutes a certain degree of competitive advantage through product differentiation and cost reduction; which in turn leads to value creation. This thesis investigates the effects of unforeseen hazards such as hurricanes on crude oil prices and thus, provides investors with fair predictions of crude oil prices in the future.