Oil is a commodity which is important for any economy You are required to produce a report on the oil industry and its impact on the UK economy This should be based around the issues discussed in the article written for the BBC news as well as your own

With oil prices being doubled, there is strong probability that the overall output level will decline. (Rogoff, 2006)
UK economy is facing one of the toughest economic challenges in its recent history. What started as a subprime mortgage crisis in the US has actually affected the UK and rest of the European countries also. There have been consistent decline in GDP, increase in level of unemployment as well as reduction in the manufacturing output. In such a scenario, raising oil prices can increase overall cost of output and resultantly decrease the manufacturing output and pace of economy more. Libyan conflict, as well as other political conflicts in Middle East, can further increase the prices and, hence, UK economy may suffer as a result of this change.
One of the key factors affecting the demand and supply in energy market is the political and armed conflicts in Middle East Region. Since the region is one of the highest oil producing regions in the world, political and military conflict in the region can create external shocks for the supply side of oil in the market. Political and armed conflicts actually can reduce the supply of oil in the market and, resultantly, short term price hikes are experienced due to constrained supply.
Another important factor which has been discussed in the case study is the overall situation in the North Africa with possible ripple effects on the Middle East Region also. (Bbc.co.uk, 2011). The conflicts in countries like Libya can seriously reduce the overall supply of oil in the market.
World oil market is considered as relatively inelastic because changes in prices normally do not result into reduction in the demand for the oil. Increases in prices also do not induce increase in production because it takes time actually to develop infrastructure facilities to meet the additional demand. However, it is also important to understand