The Managerial Theories Essay Example | Topics and Well Written Essays - 1750 words

The Managerial Theories - Essay Example This paper covers the inherent conflict between providing costly incentives to motivate managers to perform well, against the overall profit motive of the firm. In analysing this conundrum, the author will call on the different kinds of motivational tools available to the Managing Director and the Board of Directors of a firm, and how those tools are regarded both by the managers whose incentives are affected, and the shareholders of the firm, who are presumably trying to maximise their gain (Griffith 2000).  As income taxes have risen over the past historical era, the outright impact of salary or bonus increases has been moderated somewhat. The incremental tax on income in the UK and the US is at about 50%, hen all local and national income taxes are taken into account. Thus the standard supply and demand relationship demonstrates a curve, as shown below. Since taxes climb with income, the curve’s change in slope is more pronounced:  As compared to the turn of the last ce ntury, when income taxes were less than 10%, the total impact of increases in wages has therefore moderated. The second influence on this moderation has been the increase in the value of leisure time (Kokoski 1987). As the value of leisure hours has increased, the amount which needs to be paid to offset the value of leisure time has also increased, all else being equal.  Group incentives can take the form of income increases (salary and bonus) or non-monetary rewards, such as additional vacation days. From a microeconomics standpoint, there is no difference between group pay incentives and individual pay incentives. There are psychological differences which can be substantial, however, depending on the type of performance being rewarded.   An extreme example of the point above is an individual whose personal rewards far exceed those of the group.

An analysis of the idea of measuring and reporting human capital in Essay

An analysis of the idea of measuring and reporting human capital in the balance sheet - Essay Example 77). Companies including human capital will improve the companies’ goodwill in the external and internal environment. The political economy of the firms will improve when the company illustrate its relationship with different skilled employees since the society will appreciate the move by the firm to treat its employees in the best ways possible since they are part of the society. The company that includes training of its employees in the financial reports creates better coexistence with the government thus increasing their good reputation and in return generate more profits since the government helps it in training and developing employees who are skilled to produce quality goods (Blair 1999, pg. 43). It is important for a company to include equity to portray it does not discriminate against the physically but skilled employees or recruits creates a better image that will shape the scope of the market stock prices. Gender equality will portray better correlation with the society, which is important in expanding their company on its improved goodwill (Wyatt & Frick 2010, pg. 213). The inclusion of human capital in a financial report is very beneficial to firms thus this essay shows the reason behind exclusion of such a beneficial factor in the financial reports of most companies. Financial reports are responsible to portray the company’s financial activities and the best way the company is able to allocate its resources. This information is important to the shareholders or investors, competitors and the society. The shareholders who invest money in the company should have the knowledge of the composition of the employees the company operates with to ensure they make justifiable judgments on the funds to invest (Sveiby 1997, pg. 137). If the company prove that, the employees are talented, innovative, skilled and self-motivated, the shareholders will invest more funds since they are sure the employees at hand will generate more profits making the

Documentary practice

Documentary practice Documentary practice is the method of creating documentary information to explain or help others observe historical or current events. In the middle of the 1950s industrial developments made film and then video more convenient and inexpensive therefore allowing more people to be involved in the practice of documenting. An example of this would be an ordinary citizen being able to capture the political world as changing events occurred with his camcorder, transforming him from a witness to an amateur documentary filmmaker. For example, the infamous 1991 video of Rodney King being subjected to excessive police restraint is an early example of the continuing power of the ordinary citizens ability to have a real impact on documentary practice.[1] Documentary practice is therefore deemed to be a reference to what we create with media technology, substance, type, and manufacture strategies in conjunction to deliver the creative, ethical, and conceptual problems and choices that arise as they make documentary films or photographs or other comparable presentations based on fact or reality. Today we have a vast expanse of new media technology available to us to continually restructure documentary practices in considerable way. Recording technologies implanted within portable devices, for example hand-held digital video cameras, video-equipped mobile phones and still cameras, have made it achievable for large numbers of us to connect within citizens journalism and the documentary practice. By allowing other people to trace and share their experiences, all the up-and-coming media technologies produced are transforming the ways in which people document facts and also how they contribute to the actual events that they are documenting. Daily life can become a performance as these people respond to events and encounter new experiences through documentary practices, creating reports of those events, which they can then go and share with others all over the globe via the Internet. For a lot of people, digital media becomes a form of documentary practice when they are created for and then shared via social-networking sites like Twitter, Flickr and Facebook. A recent example of documentary photography being available to all is the footage of a US Airways plane Flight 154, with 155 people on board landing in the Hudson River. It was brought to the worlds attention even before the mainstream media delivered the information, immediately posted online for everyone to see. An image is a document of something that happens for a split second in that moment of exposure. From this point of view no photograph is less of a form of documentation than any other. However one could disagree with the view that photography is of that moment and therefore faithful and an unmediated show of the physical world which we live in. This could have been true if not for the digital camera. We now all take for granted the process for turning what we see into an image and how easy they are to alter or manipulate. Photographs still remain the only form of evidence, which is still accepted in the courtroom but how can this be when we have examples of edited photos like this of the Model Evolution With Makeup And Photoshop. What used to be a global trust in the truth of images has now been lost. During the 1980s, the children of the postmodern documenting movement, Sontag, Berger, and company, transformed this skepticism of the truth of photography, especially that of documentary, into outright antipathy. Certainly, for the postmodern, distrust of the photograph took an ethical stance, although this was seen as closer to pathological. In the belief of these critics, the photograph was merely a tool of late capitalism, exploiting its subject matter and duping its viewer. Consequently, Abigail Solomon-Godeau charged that the documentary photo-or what she splendidly referred to it as the regime of the image- commits a double act of subjugation[2] in which the unlucky subject is persecuted firstly by the social forces, the act that they have been done wrong by, to put them in the position of having their picture taking in the first place, then by the photographer and viewer. There are not only the masculine and feminine gazes, black and white gazes, gay and straight gazes, but also the political, artistic, the negative and positive gazes. Therefore can society as a whole have a gaze? Considering he individuality of the arrangement and attitude of the onlooker, is it vital to understanding the labor of visual sociologists? This is all discussed in the well-appointed essay on documentary photography by Abigail Solomon Godeau, Who is Speaking Thus? from the book Photography at the Dock. Abigail Solomon-Godeau talks about Jacob Riis in her essay, asserting that in Jacobs images he does not exploit his subject with the return of a glance. She argues that by not identifying his subject he has refused a personal attachment, yet leaving his spectator within a social unrest. However this is still remains an exploitation within status, as a pictorial spectacle usually targeted for a different audience and a different class, giving the collections of images the name How The Other Half Live. His photographs became a larger enterprise of power of surveillance, containment and social control due to threats posed to the American by the large numbers of poor, unassimilated immigrants, aiming to leave the rich in a specter of social control. John Tagg went further by stating that documentary photography is ultimately a function of the state, deeply implicated in the ruling classs apparatus of ideological control and its reproduction of submissive labour power. It was not art phot ographers who incited the anger or fashion photography but instead socially deliberate photojournalists, with their confidence in conventional fictions as growth and truth. Martha Rosler, quoted, Documentary is a little like horror movies, putting a face on fear and transforming threat into fantasy. Martha Rosler is confirming the understanding that photojournalists, although believing that their acts of photography are for the aid of understanding and recording are victimizing their subject and taking control of their misfortune. By photographing images such as migrant agricultural workers family, 1936, by Dorothy Lange staging the image to come across a certain way. Lange took these images for a project called Farm security administration, which was a large scale, federally funded propaganda machine initially conceived to foster support for New Deal relief programs. The subjects were told to stage a somber pose, they were not allowed to wear their best clothes but forced to put on their everyday rags and not to wash their faces or hands for the photo. Those photographers like Walker Evans, who did not abide to these rules and had their aesthetic agendas did not fare well at the F.S.A. This image by Dorothy Lange is a perfect example of Abigails essay on who is speaking thus? It is an image of a women who looks hard done by, struggling, her face looks lost but yet is looking out in what we presume to be farmland as if there is hope out there for her. She has selected with an unerring eye. You do not find in her portrait gallery the bindle-stiffs, the drifters, the tramps, the unfortunate, and the aimless dregs of society. In an essay written almost 30 years after the event, entitled The Assignment Ill Never Forget, Dorothy then gave us her story of how she made the photograph. I saw and approached the hungry and desperate mother, as if drawn by a magnet. I do not remember how I explained my presence or my camera to her, but I do remember she asked me no questions. I made five exposures, working closer and closer from the same direction. I did not ask her name or her history. She told me her age, that she was thirty-two. She said that they had been living on frozen vegetables from the surrounding fields, and birds that the children killed. She had just sold the tires from her car to buy food. There she sat in that lean- to tent with her children huddled around her, and seemed to know that my pictures might help her, and so she helped me. There was a sort of equality about it.'[3] We later find out that all of this is untrue because the photographer has edited this image; a hand was removed for the corner of the picture making you then believe it was tampered with and set up. In other words, the appeal was created by altering the situation to make sure the viewer was premised on the assertions that the victims of the depression were to be judged as the deserving poor, and thus claim redress hinged on individual misfortune rather than on systematic failure in the political, economic and social spheres.'[4] In collective with our own government agencies that embrace photographic substance, the F.S.A. gave out prints for reproduction in the every day press. In the New Deal relief program project photographers were handed set shooting scripts from which they had to work from, they didnt have possession of their negatives and also had no power over how the pictures would be set, captioned and resized so cut out certain parts of the images the F.S.A didnt agree with . The photographers position was comparable to that of photojournalists working for the commercial press. Soloman-Godeau is troubled with the opinionated implications of that to which the image testifies. In relation to the supposed fairness between the photographer and her subject it is importance noting that the migrant mother herself, Florence Thompson, was searched to her trailer home in Modesto, in California. One of the 20th centurys most recognizable and revealing images was reviewed as an ordinary woman, who was poor in a routine way and now no longer possible to live life as a symbol of dignity and sorrow in the facade of poverty. Florence Thompsons image has been viewed in many different forms and in many places, and has also been copied millions of times all over the world. She was one of the most familiar figures of 1930s America during the New Deal Relief, but not until about 50 years subsequent to the event did she get to comment on it in public. She told united press that she was proud to be the subject of the photograph, but that she had never made a penny out of it and t hat it had done her no good.[5] Realism is an issue for not only literature: it is a major political, philosophical and practical issue and must be handled and explained as such[6] Although many of these photographs have exploited their subjects there have been cases where the subject although exploited have then seek fame from there documented situation. An example of this is the mug shots of Hugh Grant and Divine Brown. Although humiliating for Hugh Grant is gave him a lot of new opportunities, but it also opened a whole knew world for Divine Brown, who became famous, almost a celebrity. The mug shot does not exploit but it also does portray a story, it only documents facts and references as evidence for the police to document crime. It is not there to make the viewer understand a story or feel sympathy. There is no one trying to speak though the image, not even the photograph. However their glance into the camera can show and convey and feeling such as Hugh Grants unease. To think otherwise was to participate in fraud: The wholeness, coherence, identity, which we attribute to the depicted scene is a projection, a refusal of an impoverished reality in favor of an imaginary plenitude,[7]. In the outlook of the critics, it was unachievable to ever envisage the new world, for the gaze of the photographer and his audience was programmed by ideological forces beyond our own power; we are all simply caught in capitalisms web, which non of us can sadly escape. As John Berger would mention, unlike there late master, some of Barthes structuralism followers love the closed systems. Yet certainly, Victor Burgin condemned the actual activity of looking as an odd stance, for a photography critic: Our conviction that we are free to choose what we make of a photograph hides the complicity to which we are recruited in the very act of look.[8] He insisted these critics regard the photographs as a confinement and the ability of vision as a crime. There is a perception of photographs as containing reality, a service that disappears over time, so that its primary intricacy gives way to the iconic. The community does not need reminding of the strength of images. A power that also includes their capability to go beyond the unique impulse of their construction like that of the disconcerting image telling of the Migrant Mother, told and retold which inevitable offers, with severe poignancy, an common display of discourse as a depository of understanding and meaning. The photograph has as much as its destroyed history portrays a story of, a woman, her children, a photographer, a government bureau, a popular magazine and a changing public. All of which contribute to an image to give it meaning and a form a depth. Inevitably it is an image and tail composed, revised and re-issued in various venues until whatever reality its subjects first possessed is drained away. [9] Bibliography http://www.youtube.com/watch?v=3RBewhoQu34feature=player_embedded# Observations: Essays on Documentary Photography By David Featherstone Many Voices: Documentary Photography By Virginia Allyn The Genius of Photography By Gerry Badger Photography at the Dock: Essays on Photographic History, Institutions and Practices By Abigail Solomon-Godeau (1960). Language As Symbolic Action: Essays on Life, Literature, and Method. Berkeley: University of California Press. Film theory: critical concepts in media and cultural studies By Philip Simpson, Andrew Utterson, Karen J. Shepherdson The Photography Reader- By Liz Wells A Life Beyond Limit By Linda Gordon http://www.authorsden.com/categories/article_top.asp?catid=17id=28801 http://bostonreview.net/BR31.5/linfield.php http://www.eyewitnesstohistory.com/migrantmother.htm Dorothy Lange Solomon-Godeau, Who is speaking thus? page. 179 Dorothy Lange- A Life Beyond Limit By Linda Gordon Illustrated Bertolt Brecht Film theory: critical concepts in media and cultural studies, Page 52 http://www.weskline.org/Classes/burgin_looking_at_photographs.pdf The photography readerBy Liz Wells, Victor Burgin, page 134 Rabinowitz 1994

Do You Choose to be Homosexual? Essay -- Biology Essays Research Paper

Do You Choose to be Homosexual? Is it possible for one to choose his or her sexual orientation? Is one's sexual orientation something that can be changed, or is it a fixed attraction? These are a few questions, among many others that have been raised by researchers and religious organizations, as well as everyday people. Particularly, over the last decade there have been various debates over whether sexual orientation is based on genetic factors or whether it is a choice. Most researchers find that homosexuality, like many others psychological conditions, is due to a combination of social, biological, or psychological factors (1). Psychiatrist Jeffrey Satinover believes influences including a postnatal environment have an impact on one's sexual orientation. Examples within this postnatal environment include cultural behavior as well as the behavior of one's parents and siblings (1). This is just one specification that one's sexual orientation is determined at a young age, and is a lifestyle that is not chosen. A statement issued by the American Psychological Association can support this observation. A spokesperson for the organization states that "...However, many scientists share the view that sexual orientation is shaped for most people at an early age through complex interactions of biological, psychological, and social factors" (1). Richard Green, a psychiatrist at the University of California, Los Angeles, conducted a study that compared effeminate and "masculine" boys (3). In this study, Green found that children who grow up to become homosexual often engage in "gender inappropriate play" in their early childhood. "Feminine" boys generally played four times as much with dolls and about a third as much with trucks ... ...y other suggested factors. One's sexual orientation cannot just change over night or within a couple of years. In many aspects, it is much like those who sing and dance. To elaborate, when hearing the biographies of many of today's stars, it is said that a vast majority of them started singing or dancing between the ages two and five. The same concept holds true for one's sexual orientation; it is developed early in one's childhood. References 1)Is Sexual Orientation Fixed at Birth? http://www.narth.com/docs/bornway.html 2)Is Being Gay Natural and Do We Have a Choice? http://www.gayline.gen.nz/natural.htm?o=0 3)Homosexuality: Chosen Lifestyle or Fixed Orientation? http://www.religioustolerance.org/hom_fixe.htm 4)Homosexuality: Genetics & the Bible http://www.qrd.org/qrd/religion/judeochristian/another.effort.at.explaining.the.bible.and.queers

Considering Your Audience Essay

The three views to wri? ng to an audience are classical, cogni? ve, and social views. They all vary in their own aspects, but all of them have great methods for wri? ng. Classical view is the same as classical wri? ng from our classical world. It is comprised of di? erent components: theory, analysis and imita? on, and prac? ce, classical view has to do with an audience that is iden able age, demographics, religion is appropriate for and audience that we do not know. It helps writers prac? ce gramma? cal, logical, and rhetorical skills, as well as  thoughts of imita? on and persuasive communica? on. A cogni? ve view has to do with the way a writer transfers his ideas together to an unknown audience. In this view, writers analyze how people process and read the informa? on presented to them, in term the writer uses his mo? va? on to consider the level of his audience. A good example would be reading a textbook, the ideas designed to teach or inform unknown audiences. There are highlighted ideas as if a textbook would have to help guide you through the book to make it a whole. Social view is more speci?  c and dependent on what one is wri? ng. Social view style comes from some type of interac? on, which is predominantly used to a%ract readers on a speci? c topic from talking about things that audience is interested in. I thinking that maybe a social view would be like wri? ng a biography. Alterna? vely, maybe social media? The view that I o’en use in wri? ng is normally cogni? ve. due to the fact that I serve in the military I like to develop my ideas and thoughts ? rst, then guide my audience through my process and possibly to my conclusion.

The Factual United States Criminal Justice System

The Factual United States Criminal Justice System. Myths are stories telling a part of the world view of a society or give an explanation of a practice, belief, or natural phenomenon. It is a popular viewpoint, embodying the ideals and institutions of a society or segment of society. Although myths are regarded as fictional representations, they often reveal underlying ideals. Myths often tell us more about our social and cultural values than they do about any particular circumstance. While myths seem to explain events, often times they instruct us on integrating an event an individual’s belief system and worldviews. The phrase crime myths does not stray too far from these definitions. These types of myths are†¦show more content†¦Contrary to these many popular beliefs which are falsehoods given to society , the criminal justice system proves to be the opposite. Many times, the media is the main cause in contributing and encouraging the creation of crime myths. The mass media have responsibilities to update the public on the activities occurring domestically and internationally. Stories or reports have to grab the attention of viewers and often times this is accomplished through methods of dramatizing and sensationalizing stories. Instead of stating solely fact, mass media reports have become bias opinions, allowing for it to evolve into more of an entertainment business rather than news. Even more specifically, images from law related television programs contribute to this point of view. The typical television show documents a problem and solution within a thirty to sixty minute time frame giving many viewers a false sense of the workings of the way in which the criminal justice system actually operates. The more Americans are led to believe the falsities within these television programs, the more naive of crimes citizens become.

Essay on “International and Domestic Oil Prices”

Essay on â€Å"International and Domestic Oil Prices† Introduction The involvement of the financial markets in the modern economies and the oil market is such that upwards of 60% of the crude prices are not determined by the supply and demand forces on the markets. Instead, leading hedge funds and banks, through the international oil exchanges in London and New York control the spot prices through oil futures (Rich, Streitfeld, Rampell, 2011). This has effectively crested more scope for speculation within the industry, which when coupled with the emergency of bond markets across the world, the scare of the exchanges markets losing an actual backing of the actual markets has arisen, with dire consequences on the predictability of oil prices. These have an ultimate effect in the economies of countries across the world. This paper seeks to assess the effects of the international oil prices on the US’ domestic economy as well as the economies of other nations across the world. The assessment includes an understanding of the role of speculation, oil exchanges, producing nations and other agents of the fuel prices, as well as the effects of their respective decisions on the consumer demand (Rich, Streitfeld, Rampell, 2011). International Oil Prices and the Domestic Economy The 1988 collapse of the OPEC administered system of pricing led to the emergence of the prices freely determined by the forces on the markets, which has survived to the present-day. The nationalizations of oil reserves and the collapse of the concessions system deprived multinational companies of the influence they enjoyed in determining the oil prices, leading to the emergence of exchanges and deals outside the horizontally and vertically integrated corporations. This was strengthened even further by the rising influence of non-OPEC producers, which in turn led into the development intricate markets across the world, including physical forwards, spot markets, options, futures and derivatives’ markets. The 24-hour trading and electronic markets, enabled by the rise of technology allowed greater access to the markets and with, multiple trading instruments. Under the new system, physical deliveries occur both through spot markets and futures, with the spot markets comprising a minority of the transactions because of the logistical difficulties associated with spot deliveries (Tang Wei, 2010). Crude Benchmarks and Pricing Long-term contracts stem from bilateral agreements for the delivery of crude oil shipments at pre-determined prices. The varied qualities of crude attract equally varied premiums (benchmarks), where the prices are determined by the price differential (D) and the benchmark crude price (PR). The price agreement for a spot or futures market involves agreements on the price differential (Fattouh B. , An Anatomy of the Crude Oil Pricing An Anatomy of the Crude Oil Pricing An Anatomy of the Crude Oil Pricing An Anatomy of the Crude Oil Pricing An An Anatomy of the Crude Oil Pricing System , 2011). The price differentials built in the Gross Products Worth of refining crude, rendering them hugely variable owing to the varied qualities of crude oil and perhaps most importantly, due to the changes in the relative supply and demand forces on the market for each variant of crude. In the recent three years for instance, the price differential between Arab Heavy and Arab Light crudes increased to reach upwards of $15 a barrel, with fuel oil being heavily supplied, despite the fact that diesel, which results from Arab Light’s saw shortages in the market (Fattouh, Kilian, Mahadeva, 2011). Benchmark differentials on the other hand are determined by the oil exporting nations, in consideration of the Gross Products Worth of the crude variant, announced up to a month prior to the loading of the products. The determination of the benchmarks builds in multiple lags, coupled with the use of dated figures, which in turn implies that the prices would least reflect the actual conditions on the market. Other nations, including Qatar and Abu Dhabi simply announce the Official Selling Prices, based on the Dubai-Oman Benchmark pricing system. Countries must not only ensure competitiveness of their crude, but also build into their pricing models the differences with between the reference and their own crudes (The Economist, 2009). In addition, oil producers delay announcing the differentials in order to reduce the lags, while also avoid being undercut by their respective competitors. Changes in the global oil prices have far-reaching effects on the domestic economies of all countries, and the fact that countries have little control over the changes in prices, makes the changes necessarily hurtful to the domestic economies. Since the beginning of 2010, commodity prices across the world have risen considerably, following a near 40% increase in the prices of oil. The international increases in the prices of oil occurred towards the close of 2010 to 2012 with the consequential cost-push inflation on the prices of basic commodities including food, metals, agricultural commodities and minerals across the world (Fattouh B. , The Drivers of Oil Prices: The Usefulness and Limitations of Non-Structural Model, the Demand–Supply Framework and Informal Approaches, 2007). In addition, the demand for oil is dependent on not only the United States economy but also all other economies in the world. The demand of major emerging economies including China, Brazil and India, w hich effectively pits the interests of different countries against each other, with the consequent increases in prices, in the event the demand of the world goes up. The recent growth in demand from China has resulted in global increases in fuel prices and the prices other commodities. The energy demand outside the OECD also contributed to the rapid depreciation of the United States dollar, with dire consequences on the ability of the country to import important resources into the country, while at once rendering its exports relatively cheaper (Ripple, 2008). The consequences of the (i) increasing oil prices and (ii) the fluctuating nature of the prices on the domestic economy are dire, with analysts estimating that a $10 increase in the price of oil is capable of reducing the GDP growth by more than 0.5%, within the OECD. In addition, a similar increase is estimated to lead to upwards 0.2% increase in the rate of inflation within the OECD, even with the multipliers used in these models ignoring multiple dynamic effects (The Economist Intellegence Unit, 2012). Other than the actual increases in demand for energy across the world are unsurpassed by the geopolitical issues that have a disruptive effect on the real supply, coupled with changes in the market dynamics. The spare production capacity of Saudi Arabia is insufficient to meet the fluctuations in the supply of other oil producing nations that may be disrupted by political and regional tensions (Tehran Times, 2012). Effectively, the demand and supply forces in the domestic economy are unrelated to the demand and supply forces within the domestic economy, effectively rendering them either too high or too low, for a domestic equilibrium to be reached. Formulae pricing is founded on the key physical benchmarks, including the West Texas Intermediate (WTI), Dated Brent, Dubai and the ASCI price (Fattouh B. , The Drivers of Oil Prices: The Usefulness and Limitations of Non-Structural Model, the Demand–Supply Framework and Informal Approaches, 2007). The benchmark prices are known as the spot market prices, form an important part of the pricing system, not least because producers and traders use them rely on them in setting futures prices, which have an influence on the spot market prices both at present and in the future (Krugman, 2009). In addition, benchmark crude is used by companies and banks in settlement of derivative instruments such as swap contracts. Governments and futures exchanges used benchmark crude for taxation and settlement of financial contracts respectively. Oil-producing countries use different benchmarks depending on the destination of their exports with Iraq for instance using the Brent Crude to export t o Europe, while its Asian and US exports are based on the Dubai-Oman and the WTI respectively. Mexico on the other hand used a weighted averaged of varied benchmarks’ prices to determine their respective exports prices, including the WTI, the Louisiana Light Sweet, the High Sulfur Fuel Oil and Dated Brent. The benchmarks are priced through assessments by the Oil Reporting Agencies, based on the market information and assessments of the quality of oil, but the prices are strict estimates, with variation between different prices (O’Hara, 2001). Further, while the benchmarking principle remains the same, the benchmarks have changed immensely, both in terms of liquidity and the nature of crudes involved in the process of assessment of the value. The Brent Benchmark for instance, has since began including the North Sea Streams Forties, Ekofisk and Oseberg, while Platts Dubai builds in Upper Zakum and Oman. The streams in benchmarks are naturally not identical in quality. This makes the benchmark prices not to reflect the price of a physical stream, but most importantly, to reflect the prices of a constructed index of different physical streams (Rothwell Gomez, 2003). The benchmark crude oil streams have been declining, with far reaching effects on the market. In the United Kingdom for instance, the decline in production of Brent crude in the 1980s from 885,000 b/d to 366,000 b/d in 1986 to 1990, resulted in massive distortions, squeezes and manipulations, with the consequence of Brent crude prices being completely disconnecte d from other crude grades. The problem was alleviated by the comingling of Ninian and Brent crudes to create Brent Blend, coupled with the ceasing of Ninian as a crude stream. Brent Blend did not last too, and with physical production delays, came the fluctuations in the prices of crude oil based on the benchmarks. With the decline in the physical production of the crude components of benchmarks, other crudes have been co-opted into the benchmarks (Rich, Streitfeld, Rampell, 2011). In 2002 for instance, Platts expanded its definition of Dated Brent to include Oserberg and Forties (from the North Sea) in order to facilitate the assessment process as well as the quality of deliverables in multiple forward contracts based on the benchmark. WTI has also been reported to be declining rapidly, with effects on the futures based on the index. Effectively, the declining physical production of benchmark crudes has the consequence of taking with it, the standards that form the basis of oil p rice determination for both the futures markets and the spot markets, owing to the huge influence of futures on the spot markets (World Bank, 2007). Alternative Pricing While the above pricing model should under ideal conditions be functional, but the involvement of high finance and financial innovation has led to exaggerations of prices (Thorne, 2010). The Posted Pricing system that was previously used by the oil companies to set the prices of oil in consultations with the oil producing nations, and in view of the conditions on the market. In this way, the speculative forces in the market would be eliminated. In addition, the oil producing countries would be able to link the physical supplies to the actual demand in the market, effectively reducing the prospects of exploitative speculation. China has repeatedly implemented this system, with limited success, largely because of the heavily innovative financial markets and instruments in the modern world (The Economist, 2011). The Chinese model is founded on the assessment of the costs of purchase of crude oil from the oil exporting prices, including the costs of transportation and other transaction costs in order to These ensure that the role of the private sector in the determination of oil prices can never be under-estimated, regardless with the amount of regulation. In addition, the characteristic inefficiency caused by the slow reaction of governments, coupled with the time lags in forecasting models render the system heavy and impractical (Krugman, 2009). Financial Exchanges, Physical Markets and Speculation Upwards of 60% of oil prices are purely as a result of speculative forces by leading financial institutions, implying that while current oil prices comprise as much as $60 per barrel that derives from speculation, despite the relatively stable demand and supply forces in the previous five years (excluding the emerging economies effect). Hoarding of crude oil, and the arrival of speculative investments backed by the bond markets and securitization into the oil futures has resulted in increasing supplies, which are not passed on to the spot market but instead serve as financial instruments (Fattouh, Kilian, Mahadeva, 2011). The potential of speculators to herd markets into supply shortages in order to profiteer is enormous, especially with the emergence of paper crude of financial derivatives, which have gained acceptance across the financial and oil markets. Financial instruments including Contract for Differences, Brent Forwards, swaps, Brent options, Exchanges for Physicals and o thers are now tradable on exchanges. This has in turn offered easy access, with reduced risk to instruments such as index funds, options, exchange traded funds and futures (Rich, Streitfeld, Rampell, 2011). This has been driven by changing investor preferences in favor of market-based derivatives, which have low transaction costs and risks. Recent studies have shown a high correlation between equity and energy returns, with the most extreme effects being evidenced in periods of financial market booms. The sub-prime markets specter (reckless risk taking due to low risks and lack of physical market bases) is evident in the non-backed markets. While it is impossible to envisage a market without securities, given the central role of crude oil on the economy, it is crucial that financial exchanges are founded on the physical markets (O’Hara, 2001). At present, most hedge funds are reeling from the collapse in profitability of the housing market, moving investments into the oil markets. This in turn fuelled a bubble in the oil market, with increases in the prices of oil futures through the period. Major companies in the European Union and North America hoarded oil, leading to appearance of oil shortages, coupled with the limit credit availability that characterized the global economic crisis. These were exacerbated Lon don ICE Futures and Over the Counter (OTC), which are not regulated, leading to the imprecise figures regarding the dollar value of the expenditures on energy investments. This in turn created and has expanded the speculative space and incentive in the oil market, with the consequence of worsening the difference between the internationally set prices and the domestic prices. This even most significant, with the declining physical production of benchmark crude, which would lead to a disconnect between the actual prices and the oil supplies. Futures Physical Markets Both spot and futures prices are determined in response to the same economic conditions, and should by necessity reflect one another. The price set for futures closely reflects the expectations, whether real or otherwise, of the future supply and demand, which musty by construction be reflected in the spot prices (Smith Searle, 2007). This is the sole intention of benchmarking as well as the pricing models adopted by the oil-exporting countries, which are constantly adjusted in order to fit in with the demand and competitiveness needs of the market. The futures contracts are closed by exporters and traders who resale the oil to the consumers, and to this extent, the demand and supply forces are reflected. However, similar conditions would only prevail, if the demand by the oil traders is driven by the final market needs, and not speculative demand (The Economist, 2009). Speculative demand for oil, and the relative power of financial institutions and the instruments that have emerged in the modern markets have resulted in the creation of artificial markets, which may be manipulated to the benefit of the oil traders and speculators. This occurs through artificial increases in the prices, driven by futures markets that are founded on artificially created expectations of demand and supply. In addition, even if there was no manipulation, squeezes etc, the forecasting formulae that is used to project the futures contracts pricing is independent on whether prices increase or fall (Ripple, 2008). Further, the effect of politics and geopolitical tensions involving oil-producing nations and regions, have a greater effect on speculative and futures markets than the physical markets. While for instance the Iranian, Egyptian and Libyan crises resulted in fears of reduced oil supply to Europe, Asia and the Americas, with the consequent increases in oil prices, the actual reductions in supply have not been significant (Krugman, 2009). However, the pricing models for futures that built in this possibility in turn resulted in prices that did not reflect the physical markets. This is noticeable in periods when supply was increased by both OPEC and non-OPEC nations, which were however, not reflected by reductions in the fuel prices. The United States, which accounts for a quarter of the global oil trade and consumption, has in the recent past offered a clear example of how oil futures distort the physical trade. Traders sale the dollar short, while selling oil long, leading to a fall in the current prices at which they acquire oil and hoard, to supply it during shortages (Eicher, Mutti, Turnovsky, 2009). The geopolitical tensions and the prominent role played by the speculators easily masks the role played by multiple other players in the industry that however, have an influence on the spot and futures prices. These players include the oil exploration and extraction companies, the refineries and the entire petrochemical industries among others. This adds to OPEC oligopoly, which does however comprise multiple oil rich nations that compete against each other to ensure the competitiveness of their oil. Iran and Saudi Arabia’s Arab Light for instance are of the quality, land go for about the same prices (Thorne, 2010). However, the two nations must compete for markets abroad. Effectively, it is in the interest of every country to make certain that their prices are as low as possible. However, the intermediaries that deliver the oil to the final consumers have an impact on the prices beyond the control of any one player. Effectively, the international pricing system is the only vi able pricing system, open to OPEC and other agents. Conclusion Benchmarks represent the most important pricing system, but ht emergency of financial derivatives based on oil, have led to the distortion of the oil prices, coupled with the lack of transparency in the industry, which has in turn resulted in the gap between the actual and the futures prices (Eicher, Mutti, Turnovsky, 2009). A lesson from the sub-prime mortgage crisis is apt for the oil market. 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