Energy Economics Midterm Study Quiz

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What is the traditional unit used to measure crude oil prices?

Gallon

Barrel (correct)

Kiloliter

Cubic meter

What is the typical unit of measurement for natural gas prices?

Cubic meter (correct)

Gallon

Barrel

Kiloliter

If the price of natural gas decreases to $1/MMBTU, what would be the effect on electricity prices based on the information provided?

Double

Decrease (correct)

Increase

Remain unchanged

What does the abbreviation 'bboe' stand for in the energy industry?

Barrel of oil equivalent Signup and view all the answers

Which unit is commonly used to express heating values for liquid fuel?

MMBTU/barrel Signup and view all the answers

What is the primary reason mentioned for the recent rise in oil prices?

OPEC+ extending output cuts Signup and view all the answers

How are underground oil deposits formed?

By heating organic material at the right temperature and trapping oil or gas underground Signup and view all the answers

What does a higher number of carbons in hydrocarbons indicate?

It represents heavier and more complex molecules in the oil Signup and view all the answers

What is the main difference between sweet and crude oil?

Crude oil is low in sulfur and requires less processing Signup and view all the answers

Why do some places have natural gas while others have oil?

The time and heat exposure determines whether organic material turns into gas or oil Signup and view all the answers

What is the most valuable type of crude oil?

Sweet light crude oil such as Arab Super Light Signup and view all the answers

What is 'upstream' in the oil and gas industry?

Exploration and production activities for locating oil reserves Signup and view all the answers

What is the main difference between physical markets and financial markets?

Physical markets involve buying and selling commodities directly, while financial markets involve trading financial contracts. Signup and view all the answers

What is the convenience yield?

The benefit of holding the physical good over a financial contract. Signup and view all the answers

What do call options allow the buyer to do?

Buy an agreed quantity at a certain price and time. Signup and view all the answers

What is the seller's obligation in a financial forward contract?

To sell the commodity at the agreed contract price. Signup and view all the answers

Which country has seen a huge increase in CO2 emissions over the last 25 years due to burning a lot of coal?

China Signup and view all the answers

Which country has abundant natural gas according to the text?

Russia Signup and view all the answers

What is the main difference between midstream and downstream activities in the gas industry?

Midstream involves storing and transporting, while downstream involves refining and selling. Signup and view all the answers

How are oil and gas primarily transported?

Big pipelines with pump stations Signup and view all the answers

What are chokepoints in oil/gas transportation?

Narrow channels with high trading volumes Signup and view all the answers

What is the significance of the year 1859 in the history of the oil and gas industry?

Edwin Drake starts the first commercial well in Pennsylvania Signup and view all the answers

What are spot markets in the context of oil and gas trading?

Short term market; delivery takes place immediately or with minimum lag Signup and view all the answers

Why are long term markets important in the oil and gas industry?

To stabilize prices over time Signup and view all the answers