Demonstrations

The following demonstrations do not necessarily have to start from the neutral position or condition.

1)     A reduction or cutoff in one source of supply

• The participant turns down or turns off a faucet on the upper tank.

• Observe the change in inventory level in the middle tank.

• Discuss or speculate on the impact on price and the short-term and long-term impact on other supplier and consumers.

• Have the participant compensate for this loss by increasing the flow from another faucet that is not fully opened already (spare capacity), if a return to a "normal" level of inventory is desirable.

2)     A reduction in demand

• The participant reduces the flow from one or more of the faucets in the middle tank simulating a reduction in demand due to a weakening economy of similar conditions.

• Observe the change in inventory level in the middle tank.

• Discuss the supplier's reaction.

• Discuss potential causes for a weakening economy such as higher oil prices that may have resulted in #1.  Hand out price history information.

• Have the participant adjust the supply flow as desired.

3)     Catastrophic cutoff in supply

• The participant vastly reduces the flow from the "OPEC" supply faucets on the upper tank. 

• The participant turns on the Strategic Petroleum Reserve (SPR) faucet.

• Observe how long the SPR can replace normal production.

• Discuss how and when the SPR should be used and what international actions could be taken.

4)     Green Supply

• The participant opens the "Green" energy faucet.

• Observe the impact of green drops on the color and inventory level of the middle tank. 

• Hand out evolution time line of energy sheet.

5)     Missing Barrels

• Place the tape over the inventory level in the middle tank.

• Discuss the volatility in prices that result from the lack of accurate and timely information of supply and inventory data.

• Hand out Economics 101 S/D chart and the historic distribution of oil prices.