StudentShare solutions
Triangle menu

Political Economy of Oil - Essay Example

Not dowloaded yet

Extract of sample
Political Economy of Oil

The crises that started with the oil crisis in 1970s extended to Gulf War in the 90s. There are different terrorist threats today that affect oil resources such as oil refineries in Saudi Arabia. The deteriorating law and order situation in Iraq also resulted in fear of disruption of oil supply. There are threats of war with Iran that bring greater fears of volatility in the oil-producing region. These & other such factors have kept oil prices very high and they affect current market scenario. The hope for stability in oil prices is dependent on both political & economic stability.
Transportation, heating, power generation, the plastics, pharmaceuticals and synthetic fibre industries are the main ways in which oil is consumed. Demand for oil is greater in the developed nations compared to the developing economies. United States of America solely generates a quarter of world oil demand. Asia comes next with Japan having the highest consumption of oil. In Europe no one country can be considered highest oil consuming country instead the demand is evenly generated by all European nations, The demand for oil diminished considerably in Soviet Union after its collapse.US demand for energy is greater and its dependence on oil producing countries is also increasing.
The oil supply is mainly provided by large companies operating in countries with large reserves of oil. Countries like UAE, Saudi Arabia, Venezuela, Norway and Kuwait are some of the oil rich countries and are main suppliers of oil to the world. Since supply side of equation plays a crucial role in stabilty of oil markets, the countries producing oil have been trying to stabilize the price of crude oil through production policy. However, the interest of world economy does not lie in bringing stability by production manipulation. Since oil is a resource that depletes with time so its value increases with time as well. A country cannot let go of its future worth or value by increasing its production at the current market price. It is not in the economic interests of such oil producing countries to pursue a production policy incompatible with their own economic interests.

Countries like Saudi Arabia have been contributing to the world economy in general and other Western and developed economies like Japan in particular by supplying more oil than it should. For instance Saudi Arabia, of the largest oil producers, increased its production of oil after the oil crises of 1979, resulting in a downward crude-oil price trend in world markets. This manipulation by any country or cartel cannot reap economic benefits in the long run. The market factors should be allowed to play their due role instead of manipulation. There is an increasing trend in demand for crude oil because consumption is greater than the supply. Market economy is the best way to allocate resources. The concept of oil peak suggests that once we reach the stage of peak the economy will be greatly affected. Similarly experts say that world oil reserves will also reach its peak in not so distant future resulting in price hikes and economic recession along with geopolitical repercussions.

Oil Situation in USA

If we consider the oil peak theory according to which there will be a sharp decline in supply because demand is constantly increasing whereas the speed of finding or exploring new oil sources is not matching that then we come to know that the oil ...Show more

Summary

Oil is considered a source of energy that has turned out to be the essential part of our economy. Demand for oil is increasing as we are persistently using this valuable resource. While using these resources we do not acknowledge the fact that oil is a finite resource…
Author : hwest
Political Economy of Oil essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Political Economy of Oil"
with a personal 20% discount.
Grab the best paper

Related Essays

Breton Woods Monetary System, Oil Embargo and International Political Economy
According to Friedon, J. and Martin, L. (2003, p.118), “the boundaries of IPE are not always clear”. It covers domestic trade politics, policies on FX rate, politics with the World Trade Organization (WTO), international trade of goods and capital, as well as the interaction between the domestic and international economic and political factors.
6 pages (1500 words) Essay
U.S. influence on the Iraq Oil Economy
An attempt has been made to analyze the interest of the US in the oil resource of the country.The steps taken by the present US administration to monitor the oil industry has also been discussed in detail.
8 pages (2000 words) Essay
Impact of Oil Prices on the US Economy
The global economy is rising at a very fast pace and any corrective action by central banks or Government is not likely to have a perceptible effect if recession sets in. The dependence of the economy on oil has reduced considerably with the strengthening of the IT and services sectors.
7 pages (1750 words) Essay
How have oil prices affected our economy
This has led to the economic and political redrawing of the map of the world that is testing the power hold of some nations. The balance tipped to the advantage of oil-rich nations making oil-dependent countries, the US included, left to
3 pages (750 words) Essay
International Political Economy
The transition from authoritarianism to a liberal, democratic and free market system of governance can have a variety of important ramifications in the social, political and economic spheres. Bureaucratic
10 pages (2500 words) Essay
Oil
Countries go to war because there is the need to control oil resources which other nations might have. Most of the world’s most powerful nations have oil in their foreign policy agenda, and the Oil and Petroleum Exporting Countries (OPEC) have a strong hold of on the
1 pages (250 words) Essay
Breton Woods monetary system, oil embargo and International Political Economy
er.” It considers various cultures and their response as a country or organization to certain political initiatives that have an impact on international trade, socio-economic changes and developments, including but not necessarily limited to the market developments. According
6 pages (1500 words) Essay
International Political Economy of Oil and Gas
The degree of influence of the rise of oil and gas prices in the international economy is dependent on the contribution of the oil and gas for the growth rate of GDP of the economies. The share of cost as a percentage of the
4 pages (1000 words) Essay
Oil Subsides impact on a government budget in Indonesia Iran and Venezuela
Although subsidies on fuel are significant for many governments, there absolute cost associated with them and attempts to remove the subsidies have
7 pages (1750 words) Essay
Oil and Gas Exploration and Production Contracts
The protection of the environment due to oil and gas mining is well regulated in developed energy mining countries. There are strict environmental standards that have been directed to the energy mining industries in the developed
17 pages (4250 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation