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Crude Oil Debunked!
~ Samantha Anglen
A little history on the crude oil system America seems
to know nothing about because the media isn’t sharing
it. The two major leading world markets for crude oil
are as fallows, “West Texas Instruments (WTI) and
Brent crude oil market. The WTI crude oil price reflects
crude oil demand in the USA; which is the second
crude oil importing country after the European Union;
and the Brent crude oil price reflects the international crude oil demand” (390). The study in this article includes mathematical data through an equation called “Largest Lyapunov exponent” (391). The data are mathematically formulated pricing analogies throughout, “The period before 2008 international financial crisis to the time period from November 1998 to July 8 2008 (2395) observations, and the period corresponding to after 2008 financial crisis ranges from 9 July 2008 to 7 March 2016 (1922 observations)” (S. Lahmiri 391). The study resulted in the findings of, “strong evidence that for all crude oil markets, prices and returns are not chaotic before crisis; however, empirical tests from chaos show strong evidence that volatility in both Brent and WTI crude oil markets become chaotic after crisis” (393-394). This means that taking from mother earth in this way is causing crisis in markets financially and physically. Fighting wars over fossil fuels has caused a failure in the system itself. Even if the big oil companies are still making a lot of money there has to be some accountability, and balance on the other end of the spectrum.
The study in this article is based on financial observations that are not shocking, and further prove that crude oil markets are unstable because fossil fuels are becoming harder to attain. As a result of this data my critique is that crude oil markets are beset for failure; furthermore, a better investment for the future generations of all human kind are more valuable physically and financially in alternative energies. The author’s argument is logical because of its physical findings. The test used for the study is accurate in logic because of the methods used to analyze its market. Proof of this fact is stated as, “the largest Lyapunov exponent is one of the most employed techniques to assess the presence of chaotic behavior in data as it is used to measure the rate of separation of two close trajectories in a dynamic system. In fact, it is used because of its suitability to check existence of chaos in nonlinear dynamic systems” (390). This is completely logical because of the appropriate systems that are being used to interpret a certain markets financial sustainability. These studies are used to project future returns for the companies, so that they do not make uninformed decisions on their financial endeavors.
The author mentions the Gulf War as a cause, and result of instability in the crude oil market saying, “it was found that for two Gulf Wars, the first one made greater impact on Brent and WTI; and particularly, Brent market was more influenced by Gulf Wars. The WTI oil futures market was to be weak-form efficient for the time period from April to October 2012. Additionally, it was inefficient right after financial crashes (1985, 2008)” (389,390). When everyone knows that the wars are being fought over oil. It makes me think about the subject further, and more in depth. If the market crashes right after the war, then what happens? The stocks become unpredictable, and values change rapidly. These financial crashes are caused from the wars, and the wars are because of fights over who will get the oil. Creating another growing theme for this article. That harvesting crude oil is wrong. This is an underlying message coming from the author backed up by factual data, yet he never really says that. This makes the study more factual seeming because it is not based on value, but rather on mathematical studies that are current. The author isn’t taking a stand on either side, but he is saying that there is existing data to back up the fact that the international financial issues are a result of these events, and literally causing market crashes in the system.
These events are taking place right in front of us, and are brought to life by factual analysis of real life observations by the thousands. This means that there is huge evidence in crude oil markets (after a war) causing an unpredictable, and unprecedented failure in financial stability. Why would an intelligent business person invest in something that is destined to fail? Yes, the returns in money are present, and that is why our new President wants to push the Keystone Pipelines, and the Dakota Access Pipelines into fruition. The claim by President Trump is that these crude oil pipelines “will create jobs for many Americans”, yet what will happen when a pipeline breaks into one of our major waterways? A panic, and maybe even a Civil War. Then what will happen to the crude oil market? It will fail, and the facts are right there in front of us. So please, I urge anyone invested in the crude oil markets to pull out now, and invest in saving mother earth; the only one we have!
Lahmiri, Salim. “A study on chaos in crude oil markets before and after 2008 international financial crisis.” Physica A: Statistical Mechanics and Its Applications, 15 Jan. 2017, pp. 389-395