The whole world today relies heavily on oil, from making energy to using it for transportation. Oil has effects on every basic commodity of life. Hence, when oil prices rise or fall, the cost of goods and services also gets affected. If the oil price rises, commodities get expensive, and if they fall the prices of goods and services also decrease.
Suppose you are a student, and you have a dissertation to prepare on the effects of Oil consumption on the economy. Then this following article could be very useful for you. However, if you require professional assistance and want any dissertation help. Experts at My Dissertations can help you out. Moving on, let’s discuss further how oil consumption affects the global economy. Let’s begin.
Importance of Oil
One of the most significant commodities in the world, oil is crucial to many of the largest sectors, including petrochemicals, chemicals, transportation, and power. Because of its low cost and great energy density, oil now provides nearly all of humanity’s needs. Almost all automobiles in the world operate on gasoline, made from crude oil. Despite recent findings that burning oil causes significant pollution and greenhouse gas emissions, no one is trying to stop the increase in its use. Billions of barrels of oil burn annually to power vehicles including cars, ships, trains, and more. Although it has been declining recently as a result of the sharp rise in oil prices, some nations still use oil to generate their electricity.
Supply and Demand
Oil production and consumption involve millions of people that are everyday influencing prices. Suppose the United States is the largest oil producer today, even surpassing Saudi Arabia. Although the US is producing more, per barrel in the US is higher than in Saudi Arabia. Economies can also face negative impacts if the oil-producing countries face issues. E.g. an attack on Saudi Arabia’s oil field disrupted economies throughout the world in 2019. Remember that the Oil Industry is a global network and whatever affects these oil-producing countries will also affect other countries.
Effects on Jobs
The exploration and production of oil have given a lot of jobs too many people. E.g., fracking in the US gave jobs to thousands of people. Thus improving the economy by giving more people purchasing power. Oil Production is not easy, a lot of people work together to make it happen. All this activity gives jobs to laborers, drilling crews, loader operators, truck drivers, mechanics, and engineers. Not just them, but people working in businesses, hotels, restaurants, dealerships, and hospitals also develop more jobs. Everyone can connect with anyone today throughout the globe. One small effect in production can cause damage to multiple economies worldwide.
The other organizations that tend to suffer when oil prices drop are the banking and investment sectors. As many companies invest in drilling and other services that come in when producing. Hence if prices drop, banking sectors get negative effects. Banks also finance production operations. This means that investors and banks both will lose money if prices drop. Even though investors and bankers know about the risk and rewards. Rewards might be great but a loss can result in capital losses for the investors.
This is one of the main causes of why using other energy sources is so difficult. A small amount of natural gas can provide a huge amount of energy that people use to drive machines. This is the original reason why oil is preferred by car makers as an energy source.
Almost every country on the globe has access to cheap oil. It is easily accessible for use, thanks to the effective transportation networks that are present practically everywhere. Ships, tankers, and pipelines are some of the modes of transportation for oil. However many countries still don’t have access to oil and some don’t have the necessary equipment to sustain it. Hence, countries that produce and use accurately, prosper in economic conditions.
Relying on a reliable energy supply will give you more enjoyment. Oil is one such source because it has been shown to consistently produce energy throughout the day. The majority of petroleum engines have been built using established technology, and trying to make vehicles less prone to oil, will result in malfunction. In contrast to sources like solar and wind energy, oil energy is very dependable.
Both gas and oil are combustible and volatile, and there have been several cases of fires or explosions at refineries and oil rigs. Not only will there be harm was done and a risk to the lives of the workers and firefighters, but there will also be massive spills of dangerous chemicals.
The largest risk of using oil as a source of energy has been this. Oil combustion results in the release of greenhouse gases like carbon dioxide. The ozone layer is severely harmed by these gases because their buildup promotes the layer’s degeneration. Your ability to survive on earth will take great effects in the future. The great demand for this item has led to numerous accords being signed by all nations, yet they have only had a small impact.
Another massive disadvantage is that if ever production stops due for any reason. Countries that deal with those oil-producing companies feel huge effects. As even the basic commodities rise. Hence, more people go down even below the poverty line. A single mishap can destroy small economies. Thus, the purchasing power of economies decreases. Disruptions in global trade also begin.
These were some of the basic points on how oil consumption affects global economies. Furthermore, we insist you on reaching out to Write My Dissertations and their professionals if you need any dissertation help when writing a thesis. Whether you’re writing on global issues or domestic.
Moving on, The Asia-Pacific nations that lack natural resources and depend on fuel imports to support their economic growth will gain from a substantial decrease in oil prices. These nations can reallocate these resources to invest in the country’s important projects by significantly reducing their fuel use. In contrast, the rapid drop in oil prices is not all terrible news for oil-exporting nations, who are suffering a huge loss in revenue. These nations, at least, can take advantage of the chance to change their policies by diversifying their economies into high-tech industries that can support their economic growth.