Which of the following most likely caused the steady increase in the price per barrel of oil between 2001 and 2008?

• A. A major global shift toward renewable energy sources during this period
• B. A worldwide surplus of oil production leading to excess supply
• C. Rising global demand for oil, especially from rapidly growing economies such as China and India
• D. A significant decrease in the cost of oil extraction technologies

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the basic economic principle of supply and demand, which states that the price of a good is determined by the interaction of its supply and demand in the market.
2. Step 2: Analyze each option in terms of its effect on supply and demand. For example, a global shift toward renewable energy would likely decrease demand for oil, potentially lowering prices.
3. Step 3: Consider the impact of a worldwide surplus of oil production, which means supply exceeds demand, typically causing prices to fall rather than rise.
4. Step 4: Evaluate the effect of rising global demand, especially from rapidly growing economies like China and India, which increases demand and tends to push prices upward if supply does not increase proportionally.
5. Step 5: Reflect on how a significant decrease in the cost of oil extraction technologies would affect supply by potentially increasing it, which could lower prices if demand remains constant.