Free Essay

Oil Drives the World

In: Business and Management

Submitted By yokhan
Words 661
Pages 3
OIL DRIVES THE WORLD - BBI20

People don’t realise how important oil is to the world and how a shortage of oil would have a large impact on our lives for the following reasons, it would mean trouble for businesses, the government will start losing money, an increase in prices for goods and a change in our lifestyle.
Firstly, our society is interdependent, which means that we rely on goods and services to satisfy our needs and wants. But if there was an oil shortage, our economic systems would start to concern the consumers because businesses, the producers, will no longer be able to provide as many goods for a reasonable price. The shortage of our economic resource will result in an increase of the price of oil. This is bad news for businesses because it will cost a lot more to import the goods from other places since the cost of oil is so high. This means that they will have to raise the price of their good. So unless the good is in high demand, consumers will not want to purchase the good, resulting in the business not making enough profit. And because businesses will have to cut back on importing the goods, we will start losing human resources, because if the producers have nothing to supply, they won’t have anything to sell. This will increase the percentage of unemployment.

Secondly, the government will start to lose money. The government and businesses work together to grow the marketplace. But if there was a shortage of supply, businesses start shutting down and the government starts losing money. They would have to find a way to share the oil in a fair way with businesses. They would have to think about what consumers need and what they want. They would have to cut down on many things. For example, building new restaurants or malls. It would use up a lot of oil which would make it expensive to build. It is probably something the consumers would want but certainly not need. They would also have to try to change the consumer’s taste which can increase the demand for something else, something that uses less oil to produce.

Thirdly, the consumers would have to pay a lot more for goods than before. Practically everything we touch is made up of oil. And producers have to increase the cost because if they don’t, they would be paying more for oil cost, and not be making any profit when selling goods for regular price. This impacts consumers and communities because it would be harder to afford things like food.
Even taking a hot shower and heating would cost a lot more. People will then start to realise how precious oil really is, and how dependant they were on it without even really knowing it. The demand for everything would increase but there wouldn’t be enough supply to go around and this will definitely concern and scare a lot of consumers.

Lastly, people might start to ask, “how will life change?”, “Will it be better or worse?”, and to be honest, I don’t know. I’m sure science and technology will come up with something but I’d much rather live a simpler lifestyle. Even though there would be disadvantages to it, there are also benefits, such as breathing in cleaner air, and less pollution. This also strongly helps wildlife. But it’s unlikely that will happen, many people aren’t prepared to live differently and with so much demand for oil, people start becoming greedy, and when all the supply is gone there will be chaos.

In conclusion, a shortage of oil would impact our lives because businesses would start shutting down resulting in unemployment, the government will start losing money, the prices for goods will increase and lastly our lifestyle will change. So we should all really be more aware of how much of our resources were using because once it’s all gone, we’ll regret not caring.

Similar Documents

Free Essay

Essay

...There are three main groups of oils: animal, vegetable and mineral. Great quantities of animal oil come from whales, the enormous creatures of the sea which are the largest remaining animals in the world. To protect the whale from the cold of the Arctic seas, nature has provided it with a thick covering of fat called blubber. When the whale is killed, the blubber is stripped off and boiled down, either on board ship or on shore. It produces a great quantity of oil which can be made into food for human consumption. A few other creatures yield oil, but none so much as the whale. The livers of the cod and the halibut yield nourishing oil. Both cod liver oil and halibut liver oil are given to sick children and other invalids who need certain vitamins. These oils may be bought at any chemist's. Vegetable oil has been known from antiquity. No household can get on without it, for it is used in cooking. Perfumes may be made from the oils of certain flowers. Soaps are made from vegetable and animal oils. To the ordinary man, one kind of oil may be as important as another. But when the politician or the engineer refers to oil, he almost always means mineral oil, the oil that drives tanks, aeroplanes and warships, motor-cars and diesel locomotives; the oil that is used to lubricate all kinds of machinery. This is the oil that has changed the life of the common man. When it is refined into petrol it is used to drive the internal combustion engine. To it we owe the existence of the motorcar...

Words: 793 - Pages: 4

Premium Essay

Oil and Development

...OIL AND DEVELOPMENT INTRODUCTION Oil is one of the most important resource of industrialized nations. It has various uses like to generate heat, fuel vehicles, manufacturing goods like chemicals, plastics, paints, medicines etc. Oil is a non-renewable resource and thus has limited supply and due to its many uses has very high demand. Earlier price of oil was mainly influenced by OPEC. Organization of Petroleum Exporting Countries (OPEC) is type of cartel which mainly determines price of oil by actual supply and demand and partly by expectation. A Cartel is a group of sellers of a product who have joined together to control its production, sales, and price to obtain the advantages of monopoly. OPEC allows its members to organize their economic policies to guarantee income and influence of oil prices globally. OPEC was formed at the Baghdad conference in September 1960. The first members were Iraq, Kuwait, Iran, Venezuela, and Saudi Arabia. The organization later included the United Arab Emirates, Qatar, Algeria, Indonesia, Ecuador, Nigeria, Angola, Libya and Gabon. OPEC has a unique structure because its members are not companies but rather countries. As these countries have formed a cartel, the market is served by a monopoly as the primary purpose of a cartel is not only to drive up prices, necessarily, but to drive competitors out of the market. The members not only agree to the total level of production but also about the amount produced by each member. OIL PRICE TREND The...

Words: 719 - Pages: 3

Premium Essay

Renewable Energy Europe

...Europe, The Renewable Energy Union Europe, the renewable energy union It is not a secret anymore that the world is running out of fossil energy resources. The oil winning has peaked which means that it becomes harder and harder to pump up the oil these days. Eventually the costs will exceed the benefits. Without payable energy resources the world economy will collapse which will result in hunger, chaos and war. Action has to be taken on a wide scale to prevent these scenarios and the European Union has a big role in this. Leaders and civilians have to be prepared, lifestyles adjusted and alternatives implemented. I can argue that securing the availability of the EU’s energy resources can only be done by modifying all member states, from fossil energy consumers, to renewable energy consumers. The European Union and fossil energy resources Only 15.59% of all oil the EU member states consume comes from their own natural resources. This means that 84,41% comes from non-EU members which shows how dependent we as the EU are on other countries. The EU is mostly dependent (42,4%) on the FSU (former soviet union) with Russia as its biggest supplier.[1] This means that they decide whether the prices are high or low. And nowadays, with the oil peak that is reached and other negative forecasts, barrel prices are increasing rapidly. Next to oil, another major energy resource is gas. By 2030, 60% of all natural gas the EU consumes comes from Russia too.[2] Clearly, Russia is of big...

Words: 2771 - Pages: 12

Premium Essay

Volkswagon

...------------------------------------------------- TESCO CORPORATION Presented to University of Houston Victoria School of Business MAY 4, 2014 Elena Acosta Amy Rodriguez Hina Naqvi Teghrid Darwich March 2, 2014 Hina Naqvi Amy Rodriguez Teghrid Darwich Elena Acosta March 2, 2014 Hina Naqvi Amy Rodriguez Teghrid Darwich Elena Acosta Table of Contents 1.0. Executive Summary………………………………………………………………………...4 2.0 Company History…………………………………………………………………………...5 2.1 Background…………………………………………………………………………………6 2.2 Purpose of this Study……………………………………………………………………….8 3.0 External Analysis…………………………………………………………………………...9 3.1 General Environmental Analysis…………………………………………………………..10 3.1.1. Demographic Segment…………………………………………………………………..10 3.1.2. Economic Segment………………………………………………………………………12 3.1.3. Political/Legal Segment………………………………………………………………….12 3.1.4. Socio-Cultural Segment………………………………………………………………….13 3.1.5. Technological Segment……………………………………………………………………14 3.1.6. Physical Segment……………………………………………………………………………14 3.1.7. Summary of General Environment Analysis……………………………………………...15 3.1.8. Driving Forces……………………………………………………………………………...

Words: 20369 - Pages: 82

Premium Essay

Everyone’s Gasoline Problem

...Everyone’s Gasoline Problem: Gas prices break down and vary on a daily basis primarily in direct relationship to the price of crude oil. 77% of the price of gas at the pumps is reflective to the price of crude oil. 12% is taxes and the other 12% is distribution and marketing. *(US 1) The following 2 charts show this direct relationship. *Chart Midwest Regular Conventional Retail Gasoline Prices Data from http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPMRU_PTE_R20_DPG&f=W The price of crude oil internationally can be summed up best by the following chart: In summary the price at the pump we pay is directly related to the price of crude ole and as most of our oil supply is not generated domestically our prices vary according to international pressures and demands. Chapter 3, Question 14 Before Starbucks: Equilibrium QD = QS After Starbucks introduces premium blend: After the hard freeze in coffee beans: After the hard freeze the worlds premium coffee supply would experience a temporary shortage that for the would drive prices up until the supply can be increased. Chapter 3, Question 15 After the deep freeze on the orange crop: After the deep freeze the US’s Orange supply would experience a temporary shortage that for the would drive prices up until the supply can be increased. After Bush calls for an increase in ethanol production and the impact to the US corn crop: The demand would increase and...

Words: 334 - Pages: 2

Premium Essay

Oil Conservation

...ole of youth in oil conservation ”Under your shoulders. Dear young people of the entire world, weigh the responsibility to transform tomorrow's world into a society where peace, harmony and fraternity reign. “ - Bishop Carlos Belo Youth constitute about 40 percent of the total population of India. The youth of every country is its valuable human resource. The responsibility for change, progress and innovation lies on their shoulders. Youth can make or mar society. There has always been misunderstood by the elders. The elders feel that, being immature and inexperienced, the youth usually indulge in thoughtless activities. However, the youth have the zeal to initiate revolutions. Mao Tse Tung of China realized this latent power and dedication of youth of his country. He entrusted them with the responsibility of bringing   about Cultural Revolution, a change in the attitude of the society. The youth of our country also played a significant role in the freedom struggle. Today the youth needs to play an important role in promoting oil conservation. India is country of rich cultural heritage as well as it is rich in resources essential for a comfortable living. Such resources also include the oil resources such as petroleum and diesel which are essential resources for transportation but these resources are exploited today to extreme. Conservation of these resources is necessary so as to enjoy and live life comfortably. As Mahatma Gandhi said “the earth has enough to fulfill the...

Words: 9262 - Pages: 38

Premium Essay

Petroleum

...non-renewable resource. There are over 4,000 oil fields around the world. One of the biggest oil fields is Ghawar, in Saudi Arabia. They produce about 4.5 million barrels of oil per day. There are three stages of oil extraction; Primary, Secondary, and Tertiary. During the primary extraction, reservoir drives are in place. These are the natural pressure methods that drive the oil out after drilling, i.e. natural gas and water. During the secondary extraction, mechanical methods are used, such as injecting air or gas into the well to increase pressure. During the final stage, heat and chemicals are used to help heat the oil and increase its flow. Some of the environmental effects of extracting oil are air pollution, greenhouse gasses, and oil spills. When crude oil is refined, toxins are released into the atmosphere. These toxins are dangerous to humans and our ecosystem. Burning oil produces greenhouse gasses that increase global warming. Large oil spills can be catastrophic to the environment, but most of the oil spilled in our ecosystem is from illegal dumping and leaking automobiles, airplanes, and boats. Oil is the largest source of energy in the United States, providing close to 40 percent of all of the nations entire power needs. (Pace University, 2000) Most oil is used for home heating or transportation, but a small amount is used as fuel for electricity producing plants. There are three ways to convert oil into electricity; Conventional steam, combustion...

Words: 418 - Pages: 2

Premium Essay

Summary of an Aggregate Supply Article

...Aggregate Supply Article: http://www.dw.de/russia-and-venezuela-to-fight-low-oil-price/a-18072639 Summary: ‘Russia and Venezuela to fight low oil prices’ is the title of this article it discusses how the surprisingly low prices of oil have had a huge impact on Russia because the supply of oil has outstripped the demand.  There is also mentions of a 30% decrease in the prices of oil, the article also says that the demand for oil has been falling everywhere and these oil dependant countries believe that the only way to drive oil prices back up and maintain some form of income for the economies as a whole is to ‘cut the aggregate production in the face of weaker demand’. Opinion: In terms of my opinion I find this article interesting as there are lots of problems in all of these countries that are causing oil prices to fall.  For me I feel like it’s clear that one of the large reasons for the fall in aggregate demand for oil is that China has faced an extreme slowdown in economic growth and Japan have fallen in to recession, these huge countries account for a large share of the demand for oil hence the drop.  In terms of aggregate supply it means that production has to be cut massively in Russia and Venezuela as mentioned in the article because this will be the only way to drive the prices back up, in my opinion if the aggregate supply of oil doesn’t decrease it will mean that all economies will face lower oil prices for an extended period meaning the Russian and Venezuelan economies...

Words: 313 - Pages: 2

Premium Essay

My Paper

...Assignment #3 Production and Operations Management Explain one possible option that Marathon could take to reduce the time involved in the production process. Marathon Oil is the leading integrated energy company, known for many things such as the exploration of gas and oil, oil production and refining, marketing and distribution and transportation of the finished product. Strategically located thought the world, in places such as the U.S., Angola, Canada, Equatorial Guinea, Gabon, Indonesia, Ireland, Libya, Norway, and the UK makes Marathon a large international conglomerate that is easily accessible in many markets. With pipelines running throughout the United States, Marathon is able to supply large quantities of oil to various suppliers within hours. With a large number of the U.S. oil refineries located in hurricane regions, (Such as Louisiana) can cause significant price changes at the pump, when natural disasters such as hurricane Katrina and Rita occur. By expanding and/or creating new refineries in other regions, Marathon will allow production and operation responsibilities to shift to other workers and bring more supply into the marketplace. This would take pressure off refineries when they are not able to operate under normal circumstances. Creating new refiners would not only create new jobs, but also bring in needed revenue to the economy. Another option that Marathon could take to reduce the time involved in the production process is to upgrade existing...

Words: 1759 - Pages: 8

Premium Essay

Reasons for Upheavals in Oil Prices

...Upheavals In Oil Prices In The World Robert Bourgot Florida Institute of Technology The Causes of Oil Price Upheavals in the World Introduction At this stage of civilization, oil has become an essential commodity for all countries of the world.  The lack of it means that the pace of development of any country will be adversely affected (Carollo, 2011). The world has, in the recent times, experienced severe fluctuations in oil prices. As at the start of twenty first century, the oil prices have shown a significant increase, but the most significant rise in oil prices started around the year 2002. As mentioned earlier, these upheavals in oil prices have adverse effects to the economy of each nation. An increase in oil price causes increased production costs which consequently lead to cost push inflation. This leads to unemployment, decrease in supply, fall in the people’s purchasing power among many others (Brabec, 2012). In order to address these issues, it is imperative that the roots of these issues are identified. This is the central focus of this paper. It identifies and explains the possible causes of oil price upheavals in the world. According to Maher (2012), causes of fluctuating oil prices in the world can be explained under demand side, supply side, economic side, and environmental protection side. This section looks at the causes of oil price upheavals from the different points of views mentioned above. The demand for crude oil has been...

Words: 1550 - Pages: 7

Premium Essay

Are Rising Food Costs Related to Rising Fuel Costs

...Are Rising Food Costs Related to Rising Fuel Costs? ECO 550 Dr. Isley Mary Thomas March 19, 2011 Are the rising food costs related to rising fuel costs? Not only does the rising costs of fuel cause an increase in prices, but the use of some crops to make biofuels also drives the cost of food up. High crude oil prices have fueled interest in finding alternative energy sources and reducing dependency on import oil supplies. The emergence of biofuels has given rise to an alternative market for a number of agriculture commodities. Fossil fuel is a general term for buried combustible geologic deposits of organic materials formed from decayed plants and animals that have been converted to crude oil, coal, natural gas, or heavy oils by exposure to heat and pressure in the earth’s crust over hundreds of millions of years. The burning of these fossil fuels is the largest source of emissions of carbon dioxide which is one of the greenhouse gases that contribute to global warming. Biofuels are transportation fuels like ethanol and biodiesel that are made from biomass materials. The fuels are usually blended with petroleum fuels, but can also be used alone. Using ethanol or biodiesel means we don’t burn quite as much fossil fuel. Biofuels...

Words: 2657 - Pages: 11

Premium Essay

Kidoei2P

...The U.S. first became a net importer of oil in 1948. The intervening decades have led Americans down a steady path of price spikes, shortages, and compromised foreign policy decisions. Imported fuel means expensive gasoline, lost jobs, and hobbled industries, while climate change poses risks as dramatic as they are difficult to assess. So how do we fix our fuel and energy problems? To answer that question—the first in a quarterly series called Fix This—Bloomberg Businessweek Chairman Norman Pearlstine gathered BP Capital Management’s T. Boone Pickens; Bob Shapard, chairman and chief executive officer of Oncor Electric Delivery and chairman of GridWise Alliance; Carol Browner, former director of the White House Office of Energy and Climate Change Policy for President Obama and EPA administrator for President Clinton; Jigar Shah, CEO of the Carbon War Room; and Thomas Kuhn, president of Edison Electric Institute. Their conversation has been condensed and edited. What do we mean when we talk about an energy crisis? Is that an appropriate term for framing this discussion? Shah: The word energy is very confusing. Energy includes both transportation fuel—which I think people are very concerned about—and coal, solar, wind, and other things that produce electricity. People confuse the two, and while we have fast-rising prices of electricity—5 percent rate increases per year since 2000—the fourfold increase in oil prices since 1999 is a much bigger problem in terms of economics than...

Words: 544 - Pages: 3

Premium Essay

Oil and Gas

...You can’t go anywhere in this modern world without being affected by the oil industry. We depend on the oil industry to maintain or comfortable way of living. The oil business is all about finding, extracting, transporting, marketing and refining petroleum products. The main petroleum based product is gasoline. We use gasoline everyday in our vehicles. We count on gasoline to get us to our important destinations, because most of these destinations would be time-consuming and exhausting to reach on foot alone. Petroleum is pretty much vital in many of today’s industries. 40% of America’s energy consumption is oil and 30 billion barrels of oil are used every single year. In 2005, the United States of America consumed 21,930,000 barrels of oil in a single day. The production, distribution, refinement and retailing of petroleum make the petroleum industry the largest profit making industry in the world. In America we pay a gasoline tax for the gasoline we buy. This gasoline tax is collected by the Federal Highway Trust fund and is used to pay for road maintenance and other transportation projects or needs here in our country. Therefore, gasoline tax can be described as a “user’s fee”. You drive on the roads, which increases wear and tear on the roads, so you pay the tax on your gasoline in order to maintain the roads. There has been a tax on gasoline since 1919. The initial tax rate was only 1 cent on the gallon, but today, more then 50 years later, we pay around 18-19...

Words: 1908 - Pages: 8

Free Essay

Invention of the Car

...The Invention of the Automobile The automobile has developed from a luxury for the rich into the standard for transportation. This development introduced changes in the places people lived, infrastructure, and formed problems for the next generation. Although the automobile has been a revolutionary invention in mobility and convenience, the modern consequences of the automobile use contributes to the use of non-renewable fossil fuels, and accidental death along with a rise in obesity and the generation of air pollution and global warming. Although historians disagree on the actual inventor of the first American automobile, the credit is given to Charles E. and J. Frank Duryea [1]. They were the first to successfully develop and market the gasoline automobile that most resembles the cars in use today. They gained notoriety by winning the first American Automobile race in 1895 sponsored by the Chicago Times-Herald [1]. When the automobile was first produced, it was a plaything for the rich. Even though it was not completely mechanically sound, automobiles became popular with the wealthy for day trips and longer duration vacations. This new invention gave people a way to go farther then the average traveler. It shrunk the size of countries. This travel couldn’t be possible without the change in the infrastructure of land. The first roads that were made for cars were the products of the Good Roads Movement. The movement was focused on building “farm-to-market...

Words: 1322 - Pages: 6

Premium Essay

Oil Pricing

...ricing Analysis of the Impact of High Oil Prices on the Global Economy International Energy Agency May 2004 IEA/(2004) SUMMARY Oil prices still matter to the health of the world economy. Higher oil prices since 1999 – partly the result of OPEC supply-management policies – contributed to the global economic downturn in 2000-2001 and are dampening the current cyclical upturn: world GDP growth may have been at least half a percentage point higher in the last two or three years had prices remained at mid-2001 levels. Fears of OPEC supply cuts, political tensions in Venezuela and tight stocks have driven up international crude oil and product prices even further in recent weeks. By March 2004, crude prices were well over $10 per barrel higher than three years before. Current market conditions are more unstable than normal, in part because of geopolitical uncertainties and because tight product markets – notably for gasoline in the United States – are reinforcing upward pressures on crude prices. Higher prices are contributing to stubbornly high levels of unemployment and exacerbating budget-deficit problems in many OECD and other oil-importing countries. The vulnerability of oil-importing countries to higher oil prices varies markedly depending on the degree to which they are net importers and the oil intensity of their economies. According to the results of a quantitative exercise carried out by the IEA in collaboration with the OECD Economics Department...

Words: 6052 - Pages: 25