The days when the Organisation of Petroleum Exporting Countries (OPEC) held the West to ransom have long since disappeared. High prices encouraged new sources of supply, notably in the North Sea, and massive diversification programmes, variously into nuclear power (France), domestic oil and gas production (UK and USA) and technical measures to reduce oil bills (Japan). Technology has played a key role in reducing the oil price as formerly inaccessible oil fields are opened up and very high rates of extraction are achieved. At the same time, high prices have made every economy more energy efficient, which, coupled with low growth in Europe and Japan, has restrained the growth in oil demand. The result - A fall in oil prices

Using appropriate diagrams in each case and a separate supply and demand diagram, explain the change in the price of oil from

a.The supply side.

The demand side.