Land, labor, and capital collectively produce wealth and power among the nations throughout the world, establishing a hierarchy of resourceful nations that instigate trade to make them more superior than ever before. For a nation and their population to prosper among the hierarchy, willing entrepreneurs and workers need to collectively establish a goal and achieve it to its maximum potential and quality, whatever it may be. A nation’s common resources are often reflective of their wealth and economic status. Of the common resources imported by the United States, petroleum is the most prioritized commodity and import in the market due to the amount demanded by firms, government, and residents in an outlook to promote economic growth and well-being.
These common resources are excludable to some degree and rival in consumption among everyone. Common resources are generally described as excludable because the majority of the resources are either in the atmosphere or embedded in Pangaea thousands of years ago and reasonably distributed to the continents of today. A country’s history with another, or in some case several countries in this age determines the distribution of resources among us based on our demand and their quote per barrel based on the economy. Putting oxygen and water aside, petroleum is the most prioritized common resource today emptying the pockets of insufficient oil bearing countries all over the world. In September of 1960, Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela met in Baghdad and founded the Organization of Petroleum Exporting Countries (OPEC) in response to the Mandatory Oil Import Quota Program (MOIP), established by the U.S. government in 1959, limiting the amount of oil imported to America from any importers.
OPEC is a worldwide organization open to countries with a substantial amount of petroleum exports who share the same interests of already existing members. The organization is comprised of thirteen members: Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, SP Lybian AJ, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.* “OPEC's objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.”1
Petroleum is a rock oil composed of hydrocarbon chains that can be extracted by distillation and taken to oil refineries to be treated by various chemical processes in an outlook to consume for several different purposes.
Gasoline is one of the many conversation starters anywhere you go. People have different opinions on why gasoline prices are fluctuating at such a rapid pace. Some Americans have chosen a way of thinking towards the prices. Whether it be making up rumors or just plainly trash talking towards our government. You make ask yourself the same questions many economist do, why has the price of oil been dropping so fast? Why now? This a complicated question, but it boils down to the simple economics of supply and demand. Supply and demand means a relationship between how much of a particular product is available and how much of it people want, and especially the way that this affects the level of pricing. Now of course there would be a shortage of gasoline during the summer time when everyone is traveling
Almost every single nation in our world today, the United States included, is extremely reliant on oil and how much of it we can obtain. Wars have been started between countries vying for control of this valuable natural resource. The United States as a whole has been trying to reduce its reliance on foreign oil and has had some success, especially with the discovery of the Bakken formation and projects like the Keystone Pipeline.
OPEC is a clear example of economic nationalism, a conglomerate of countries agreeing to control their respective economies by limiting trade and export of oil. The 1973 oil crisis was caused by countries in OPEC imposing an embargo on the US and several other countries after the US resupplied Israel during the Yom Kippur ...
The risk associated with these countries being the top oil producers is twofold. One, they are located half way around the world, making it expensive to transport the product logistically to a desired destination. And two, the U.S. has weak, if not contentious, relationships with them. The risks continue to mount, as America imported over 58% of its imported petroleum in 2013 from the Persian Gulf and OPEC. The players in OPEC are known globally to be hostile actors who do not have the best interest of any Western country....
Pratt, Joseph A. “Exxon and the Control of Oil.” Journal of American History. 99.1 (2012): 145-154. Academic search elite. Web. 26. Jan. 2014.
Olien, Roger M., Diana Davids Hinton, and Inc NetLibrary. Oil and Ideology: The Cultural Creation of the American Petroleum Industry. Chapel Hill: University of North Carolina Press, 2000. Web. 8 April 2014.
People need oil for daily life and work. Since World War II, oil has caused many serious problems in the United States and throughout the world. Remarkably, economic and social problems were heightened by the emerging energy crisis. By 1974, the United States gained a third of its oil by importing from the Middle East. James Oakes, et al.
The oil and gas industry in general is dominated by a few large firms therefore it is set as operating in an oligopoly market. Due to acquisitions in the industry, the four largest oil companies in the United States control the market power.
"United States Oil - Exports - Economy." Index Mundi - Country Facts. Web. 26 May 2011. .
Oil-Led Development: Social, Political, and Economic Consequences. CDDRL Working Paper 80. Robinson, J. A., Torvik, R. & Verdier, T. (2006). Political Foundations of the Resource Curse. Journal of Development Economics, 79, 447-468.
In economics, particularly microeconomics, demand and supply are defined as, “an economic model of price determination in a market” (Ronald 2010). The price of petrol in Australia is rising, but the demand remains the same, due to the fact that fuel is a necessity. As price rises to higher levels, demand would continue to increase, even if the supply may fall. Singapore is identified as a primary supplier ...
OPEC was established in the 1960's and ever since, Saudi Arabia gained a reputation of being the major power of the organization. Saudi Arabia has the biggest oil reserves in the world and production costs lower than any country. (economist.com 2003)This means that it is a natural monopoly and economies of scale arises; when the long run average total cost falls as the quantity of output increases as illustrated in figure 1. (Gans, J. King, S., Mankiw, N., 2003) Saudi Arabia is the undisputed leader of OPEC.
The current world dependence on oil leaves much to be said about the impact of Saudi Arabia and the Middle East on foreign policy and international politics. Presently the world's largest consumer of oil, the U.S. depends on Saudi Arabia and much of the Middle East for the energy to run its businesses, its homes, and most importantly, its automobiles. In the past few months U.S. consumers have felt the pressures of increasing gasoline prices as they struggle to commute and live their daily lives. This leaves the U.S. with important decisions to be made on behalf of its citizens and its position in the international realm.
Oil is an essential resource in the whole world. People use oil in a variety of ways. The world has used oil for many years and it will still use it as a basic commodity. Oil use can be traced back to 1850s. However, when Edwin Drake produced commercially usable quantities of crude oil from a 69-foot well in Pennsylvania in 1859, he marked a new period that considered oil as a valuable commodity. Oil prices have been inconsistent since 1859. The discoveries of more wells considerably lowered oil prices and made some oil barons abandon the industry. However, oil prices have increased over time because of several factors.
The largest petroleum-producing nation in Africa is Nigeria. The petroleum company is the main contributing factor of the GDP in the West African nation, which is also the continents, most noticeable and populous reserves. Since Nigeria was under British control it has suffered socio-economic and political adversities for decades. Corrupt domestic militias and complicity of multinational corporations have rid the nation of its natural resources. The same corporations that are ridding the land and exploring the resources have hypocritically identified Nigeria as a major concern with regard to human rights and environmental degradation. The petroleum business in Nigeria dynamically impacts its economy so much that “oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue, as well as generating more than 40% of its GDP.” Just to be reminiscent on this fact, the petroleum business accounts for almost the entire exporting business of a country so it raises the question of, where is the income going and how is it bring redistributed?