Oil And World Economy Essay

959 words - 4 pages

Oil and world Economy

Question: Examine the oil industry in relation to the world economy, utilising any economic theory / theories you think appropriate.

One of the most important energy resources since human invested the machine is oil and its products. But as all resources scarce, oil is limited even more. Only few countries in the world have oil fields and produce oil for the rest. Therefore, in nowadays where factories, cars and oil-fired central heating increased significantly, oil has become a necessity for the society.

People’s demands for oil and its products, fuel, gas and oil for central heating is unlimited, but supplier countries produce a fixed number of barrels of oil everyday so as to maintain a technical shortage and, of course, higher profits. These few countries are the oligopoly of the industry, have a market leader and there are barriers to the entry of new countries (Sloman 1997 : p.124). These countries are dominating the market of oil and created the Organization of Petroleum Exporting Countries (OPEC) in 1960’s. OPEC is an intergovernmental organisation that offers stability and prosperity to the petroleum market. Membership is open to any country which is a great net exporter and which shares the same ideas of this organisation. OPEC has now 11 members and supplies more than the 40% of the worlds oil market.

The price of oil over the last year has increased approximately over 100%, reaching the highest levels over the last decade. Consequently all oil products : fuel , oil for central heating and gas become more expensive. Furthermore transportation expenses increased and several imported products became more expensive, for consumers as well. Inflation rises too, affecting the economy of the whole world and the income of the households. This large increase in the price of oil estimated to decrease the demand of all its products but mostly of the oil for central heating. In Greece, for example, truck drivers, fishermen and farmers protested for fuel prices, asking for subsidies from the government. The Greek government decreases every winter the tax of oil for central heating, to help households, but this year the price of oil is doubled comparing to last years price.

OPEC at the beginning, denied to increase production, in order to cover the exceed demand, but finally increased production as much as the cartel’s price adjusted mechanism allowed. As this did not help, Greek government gave subsidies for central heating to the low income households. Although the subsidy given, this could not help much as journalists estimate. Then again a crisis in Middle East, between Israel and Palestine gave a new bust to the oil prices once again. United States and European countries trying to...

Find Another Essay On Oil and world Economy

1973 energy crisis and its effect on world economy.

1196 words - 5 pages Origins of the 1973 world oil shockWorld competition over resourcesThe Arab-Israeli conflict triggered an energy crisis in the making. Before the embargo, the industrialized West, especially the United States, had taken cheap and plentiful petroleum for granted. (Indeed, the form American cities took after World War II - with expansive suburbs full of detached, single-family homes - depended on the automobile as the principal means of

“an Overview Of The Current And Future Importance Of Oil In The World In Terms Of Energy And Resources”

1536 words - 6 pages "AN OVERVIEW OF THE CURRENT AND FUTURE IMPORTANCE OF OIL IN THE WORLD IN TERMS OF ENERGY AND RESOURCES"PART 1Crude Oil, 'Black Gold' as it is popularly known is perhaps the single most important source of energy that is finite and will soon run out. The main sources of this oil are the wells of Saudi Arabia, Iraq, Iran, Canada, USA, Kuwait, and so on. Fossilized remains of plants and animals that lived millions of years ago, were subjected to

How is the Upcoming Soccer World Cup Affecting Brazil's Economy and Politics?

2295 words - 9 pages given that Brazil is the sixth largest economy in the world with a gross domestic product of U.S. $ 2.1 trillion (Banerjee, 2014). Hosting this FIFA 2014 world cup event has created an opportunity for the country to embark on nationwide infrastructural development and renovations. The country has built 12 stadiums that will be used to all host matches for this world cup. According to Megale and Proni (2014), what gets built stays. All those

Is immigration from third world countried jeopardizing American economy and culture?

741 words - 3 pages (currently, 1.6 acres of arable land are available)."Not only is our environment suffering from the current outpouring of immigration, but our economy is also suffering to a great degree. "Harvard economist George Borjas has found no net economic benefit from mass immigration from the Third World. In his study, the added costs of schooling, health care, welfare, prisons, plus the added pressure on land, water, and power resources, exceeded the taxes

The Japanese Economy today is one of the strongest in the world. Both fiscal and monetary policies have been used throughout the decades interfering in the economy.

1531 words - 6 pages The Japanese Economy today is one of the strongest in the world. Only the United States has a higher gross national product (GNP). There is a 0% annual growth, and 2% inflation currently while the official currency is the yen. Over the years there have been many different cycles in the Japanese Economy regarding both fiscal and monetary policies. This is seen internally, within the economy of Japan, and in its relationships with other countries

What is meant by the term globalization? What are the features of the new global economy? What effects as globalization had on world trade and financial flows?

1259 words - 5 pages The global economy is the world economy. It reflects the total amount of economic activity which can be measured by GWP (Gross World Product) and PPP (purchasing Power Parity). PPP aims to get a more accurate method to compare the value of different currencies. This is done by focusing on the quantity of goods and services that can be purchased by one unit of the currency. For a global economy to exist there should be a rising share of economic

The Impact of the Oil Crisis on the American Economy

5691 words - 23 pages crude oil that has caused fuel prices to vary and the economy of the United States to be volatile. Throughout the past twenty years there have been several drastic changes in oil prices. These dramatic shifts are helpful to look at because of their impact upon the economy and the oil industry. During this time period there are three major shifts in oil price that can be linked to specific events in world history (Miller, 1998). First, the

Effects on American society and economy due to the mobilization of America for participation in World War II

762 words - 3 pages World War II affected almost every aspect of American life. The 1930's marked a decade of economic hardship. In 1930 the Great Depression deepened and millions of Americans were forced out of their homes and jobs, equaling little money to support their families. Despite the numerous government agencies created by President Roosevelt, which produced thousands of jobs, many Americans felt hopeless. The rich were getting richer, and the

What is the impact of oil price rise on various sectors of economy?

3044 words - 12 pages 34% of world total oil production (European Commission). Countries which are moreover dependent on crude are vitally affected by price rise. Every sector of there economy is under the effect of price rise. GDP (Gross Domestic Product) of India, China, Brazil, and Cuba has reduced in real terms by .5% to .7% due to Oil dependent economy. Industrial sector, Financial Sector and Transport Sector are under direct threat of oil price rise. Today's

Analysis of the Impact of Oil Prices on the Global Economy

1197 words - 5 pages the main producer, being prepared to add or subtract production to balance demand. Moreover, Russia is another major producer of oil in the world. They usually produce more when demand more and subtract when demand reduce to control the price of oil. Anyway, speculator is another factor we have to consider in short run. From demand side of view, every country is trying to reduce the consumption on petroleum, the government use tax strategy to

Canada's Contribution to World War 2. What were the 3 most important things Canada contributed to the war? -Change of economy, women's effots and the BCATP (British Commonwealth Training Program).

595 words - 2 pages Imagine. You're a Canadian citizen living through out World War II. As the war ends you're proud to have survived the horrific battle, but over hear someone asking what significant features Canada had with the war. How would you feel? What would you say? No matter who you were during that time frame, you would've had a notable and vital role even if you weren't a solider. Allied victory in World War II was in large part aided by Canadian

Similar Essays

Ecuador’s Economy: Oil And Agriculture, Overdependence

1251 words - 5 pages Ecuador’s Economy: Oil and Agriculture, Overdependence One of the main features of Ecuador ’s economy is its dependence on only a few key export commodities, most importantly oil and bananas. Oil accounts for approximately 40% of the export economy, while bananas are responsible for about 17%, and Ecuador is the largest producer of bananas in the world. The rest of the economy is mostly based on less important agricultural exports, such as

Escalating Oil Prices And The Global Economy.

2285 words - 9 pages With the current rise in oil prices, many people are asking themselves, "What is going on?" Oil prices are of major interest to everyone not only in this country but everywhere. It seems that everyday gas prices are spiking and haven't been stable for a long time. In order to fully understand this problem and how it is affecting the global economy we need to look at the variety of factors that are involved. These factors include but are not

Impact Of The Deepwater Horizon Oil Spill On Usa’s Environment And Economy

1906 words - 8 pages , location, and duration (NOAA 2010). Therefore it is considerable challenge to analyze and estimate damages, particularly where multiplex ecosystems are involved (Deep Water, 2010). It may take some time probably years to quantify the whole damage of the Deepwater Horizon oil spill to the local nature. Not only had the Deepwater Horizon oil spill enormous impact on nature of Gulf Coast but also it urgently affected USA economy, particularly on

Globilization And The World Economy Essay

1948 words - 8 pages Globilization and the World Economy Globalisation in general means the effort of a company moving into other territories (outside the national boarders of a country) to sell its goods and services to increase profits as a result of expansion. Globalisation incorporates both opportunities and risks which change the way businesses are managed worldwide. It brings about a well-diversified portfolio for such a company. This