Media File #1

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Oil prices rise on news from Libya

25 Feb 2011, Sydney Morning Herald


This article relates to what we have been learning about the economic cycle. The article is explaining how crude metal and oil prices have risen as a result of the revolt in Libya. They have stopped oil productions causing the economy to contract because of falling levels of production (output). This is a bad thing because it means that no money is being injected into the economy and as a result it is not growing. Oil is one of the biggest industries in Libya and now it's production has been put on hold. This also affects other countries indirectly because less oil will be sold to them and fuel prices especially will increase, making the public quite unhappy.  Saudi Arabia, said that it would increase oil production to make up for the lost production in Libya, if necessary. Saudi Arabia currently produces about 8.5 million barrels of oil a day and have the capacity to produce more than 12 million barrels a day. I find it interesting that the stopped production in Libya has pushed up the prices of so many raw materials like gold, silver and oil and affected so many other economies