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AN RESEARCH PROPOSAL ANALYSIS OF THE IMPACT OF CRUDE OIL PRICE INCREASE ON PAKISTAN

 

 

1.0  Title

The working title of this research is initially drafted as – An Analysis of the Impact of Crude Oil Price Increase

2.0  Background of the Study

The recent waves of oil price increases have profound effects on virtually all industries. Crude oil prices have risen to a record high, and resulted in price increases for basic commodities and services. Economic theorists and business analysts figured that the soaring oil prices which grow by over 50% from 2004 will negatively influence the world economy. According to Hong Kong Trade Development Council, this is because oil prices remain to be a significant indicator of global economic performance. As such, oil prices that are determined by supply, demand and speculation as well as taxes will affect the consumers and companies on material and psychosomatic levels.

            The petroleum industry classifies crude oil based on its geographic location where it is produced and its sulfur content. Crude may be considered light or heavy depending on density; or may be referred as sweet or sour based on its sulfur substance. In lieu with this, light and sweet kind of oil is preferred since it is easier and cheaper to refine. Nonetheless, the crude oil supply is highly dependent on world oil-exporting nations, collectively known as Organization of the Petroleum Exporting Countries (OPEC). Prior to the actual price increase, crude oil passes through a supply chain and value proposition strategies that contributes to the price and its eventual increase or dwindling.      

3.0  Statement of the Problem

The study intends to investigate the effects of run-up in crude oil prices in Pakistan. Specifically, the study is set to answer the following questions:

1)     How crude oil prices are determined? Why are global oil prices high?

2)     Why are gas prices across the countries different? What are the factors that affect gas pricing in different countries?

3)     What are the influences of OPEC in determining gas prices in Pakistan?

4)     How dependent is Pakistan to oil-exporting nations? How responsive are Pakistani markets to changes in international crude oil prices?

5)     How crude oil prices increase affect the economic performance of Pakistan? How the price increases affect the consumers, GDP and employment in Pakistan?

4.0  Research Hypotheses

The paper will work on the following assumptions:

§         Tax policy plays an important role in determining prices of crude oil in Pakistan.

§         GDP, consumerism and employment is highly volatile with respect to the movement in international crude oil prices.

§         The demand of crude oil in Pakistani is very high, making the Pakistani petroleum market as highly-dependent to oil-exporting states.

5.0  Research Plan

The research will adopt a positivism view wherein the researcher prefers to work with an observable social reality in order to come up with law-like generalizations similar to those produced by the physical and natural scientists. Also, the study opt for a deductive approach which will follow the sequence of deducing a hypothesis; expressing the hypothesis in operational terms; testing this operational hypothesis; examining the specific outcome of the inquiry to either confirm the theory or indicate the need for its modification; and finally, modifying the theory in the light of the findings (if necessary) (Robson, 2002).

In addition, the research design for this study will also focus on a multi-method research strategy using semi-structured interviews and the survey methods of research. A multi-method research strategy will be useful for this study because the methods will allowed the researcher to gain more in-depth understanding of the phenomenon of the impact of international crude oil price increases to country-specific increase on oil prices and the uses of these methods for data collection within one study will ensure that data are clear, valid and reliable.

This research would employ telephone interviews which allow the researcher to have a contact to participants with whom it would be impractical to conduct an interview on a face to face basis because of the distance and restraining costs involved and time required to conduct the interview. Data gathered using these instruments will be collated for analysis. Data analysis will primarily be characterized by comparative and statistical approach. Afterwards, the researcher will summarize all the information, make a conclusion based on the hypotheses posited and provided insightful recommendations the topic.


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