Oil dependence as a source of energy has been an issue that has years of discussion. Since the oil came to be the primary source of energy, many countries have forgotten that this type of source is a non renewable source, meaning that some day and somehow the oil wells are going to dry up. This is a big problem, in which there is no solution because no country has adapted new kinds of renewable sources in their communities. Also the oil is one a really big stimulant for the global warning. When the oil is processed some products that come to the market that are useful for the people, but the constantly use of this products affects the atmosphere and stimulates the global warning. One of these products is the one that has more demand in all countries and is basically what moves the world; this product is well known as gasoline. The gasoline is a polluting agent that aggrandizes and stimulates the global warning because when cars and airplanes use gasoline, the smoke that they produce is really dangerous for our environment. Americans are justifiably worried about energy security, especially our vulnerability to a disruption in oil supplies or a surge in world oil prices.
Since 1998 there are more than 15 of 16 nations around the world that think that the oil should be replaced as the primary source of energy. The oil is a non renewable source and so is running out. And this makes the oil prices higher and higher. Only a minimum of 22 percent of the countries believe that new oil would be found. Taking into account this minimum of countries that are against the innovation of new resources is really obvious that the developed of new forms of energies is fundamental.
Americans consume 25 percent of the world’s produced oil, but our nation holds less than 3 percent of the world’s proven oil reserves. There is a faster, cleaner and cheaper alternative, a path to energy security that would save many times more oil than could ever come from drilling in the Arctic Refuge or our other pristine protected places. Instead, an average of 70 percent takes the position that governments should assume that “oil is running out and it is necessary to make a major effort to replace oil as a primary source of energy.” The largest majorities endorsing this view are found in South Korea (97%), France (91%), Mexico (83%) and China (80%). The smallest are in Russia (53%) and India (54%), while in Nigeria only a minority (45%) holds this view. A majority in the United States (57%), the world’s biggest consumer of oil, believes their government is acting on the assumption that oil can remain a primary source of energy. Also this occurs in Nigeria (63%).
Talking about oil is reaching a point where fundamental to mention it distributor OPEC organization of petroleum is exporting countries after the oil crisis in 1970 when this organization almost collapsed after raising the prices in an outstanding way. Since this period, Nigeria has been a major and active player with Nigerian nationals taking key positions of influence in OPEC. Nigeria’s position towards the oil has grown to a point where the current President of OPEC is a Nigerian, Dr Rilwanu Lukman. With Nigeria as one of the top ten producers in OPEC, this country’s position of influence in the world oil industry is significant for a variety of reasons. Firstly, as the world’s largest population of black people, and with its nascent democracy, Nigeria is seen as playing a stabilizing role in this organization that is highly influenced by the Arab-speaking world. Additionally, its high population level and hence relatively low oil production ratio, relative to its population, compared with other members, places Nigeria as one of the members that stands to gain the most from increasing production and income from crude oil. Many non-OPEC producers such as Mexico, Norway and Russia have ramped up their oil production capacities and exports to a point where the influence of OPEC appears to be under very serious threat. Indeed, since February 2002, the largest producer of oil worldwide is Russia, ahead of Saudi Arabia, the largest OPEC producer. It is also clear that while oil has created much income for the producers, the quality of life in these (OPEC member) countries is not necessarily at the top of the world rating, considering quality of life indices globally.
Venezuela one of the countries that has the highest number of oil exportations, had pass into a crisis, a political crisis in Venezuela that halted most of the Venezuelan oil exports, the threat of war with Iraq, stocks at their lowest level in twenty six years, imports nearly record high, more concentrated imports than ever, and low upstream expenditures. However, the current problem is even worse than the previous two energy crises because, unlike the 1970s, we are starting from a case of low economic growth. Some experts argued in 2000 that the US was heading for an energy crisis at that time. Although the crisis did not happen because not all the warning signs existed at that time, the current situation is much worse because US production is lower, import dependency and import concentration are higher, and world excess capacity is lower and matches.
Also the president of the United States George W Bush, argued that, President George W. Bush probably will be remembered most for his vigorous pursuit of the “war on terrorism” after
the September 11, 2001, attacks in New York and Washington. When entering the White House in early 2001, however, his top foreign policy goal was not anti-terrorism but increasing the flow of foreign petroleum to the United States. The preceding year had witnessed severe oil and natural gas shortages in many parts of the United States, along with periodic electric- power blackouts in California. In addition, U.S. oil imports had just risen to over 50% of total U.S. consumption for the first time in American history, provoking great anxiety about the security of America’s long-term energy supply. For these and other reasons, Bush asserted that easing the nation’s “energy crisis” was to be his most important task as president. As gasoline and oil prices move to new nominal highs, energy has moved up to one of the top issues in Washington. Just a couple of days ago, the President had a photo-op with Congressional members on energy issues. The President was even moved to ask for authority to raise CAFE standards (without any statement on whether he would actually raise the standards if given the authority). Of course, none of the actions he has forwarded would actually have a substantial impact on oil imports in the foreseeable future, as I noted in this post on the State of the Union address and tackling oil addiction. With regard to the petrodollars, you have some good data and insights regarding the effects of the massive increase in spending on energy resources and associated money flows. If oil exporters are not spending their money, they are investing it, and much of it ends up being lent back into the U.S. What are the bad consequences of this?
“Since most of the reserves are held in dollars, this has tended to depress yields on Treasury securities, thereby extending the spending boom in the US and spurring elevated levels of imports.”
In short, this is leading to economic prosperity within the United States and the West in general! Now obviously there are problems and you are right to point them out, but at the same time let’s not ignore the silver lining here. Economic prosperity is a good thing, and the U.S.’s appetite for imports has helped to raise Chinese peasants out of a starvation level of income. These trends are arguably highly beneficial for the welfare of people all over the world.
I understand the worry that the situation is unstable and is poised for collapse. But nobody knows for sure that will happen. There is still hope that things can unwind gently.
Characterizing the accumulation of petrodollars as a terrible thing requires the assumption that the unknown future consequences of current monetary flows will be disastrous. But we don’t know that. What we do know is that the actual, visible impact has been positive so far, increased prosperity for both wealthy Western nations and fantastic economic growth for countries like China and India.
Just wanted to point out, as an implication of your remarks on reserve increases, that it is not clear that high oil prices are a net drag on US aggregate demand. Oil producers sell to the entire world, but lend primarily to the US. On cash with basis, that means it’s possible that the US receives more incoming funds in the form of debt purchases than are resulted as payments to oil producers for every dollar increase in the price of oil. “. (Waldman)