«Oil Industry, Growth and Development» - Great Essay Sample

«Oil Industry, Growth and Development»


The Gulf of Mexico is one of the regions that have the largest oil and gas deposits in the world. The US on the other hand consumes up to 25% of world’s petroleum but only contributes about 10% of the total.  The US’s organizations thrive to create and discover as many oil deposits as possible to address their petroleum needs and gain independence in oil production. The energy sector plays a significant role across the globe. Despite the importance of oil in the world, only few States are endowed with this resource. As an illustration, approximately a third of the globe's crude oil supply is from the Middle East.

The Persian Gulf in the Middle East possesses the largest proportion of oil and gas reserves in the globe (Smil, 2003). Such countries as Saudi Arabia are dominant players in the oil market. Based on the disproportionate availability of energy sources, the Middle East countries have an advantage in reference to the setting of energy prices. This realization coupled with the notion that energy sources are always on high demand implies that the energy sector is important in the Middle East economies. The presence of the energy sources has huge implications on the economic, political and social life not only in the region but also on world relations (Krichene and International Monetary Fund African Dept, 2006).

Industrialisation, emerging markets, globalisation and oil are aspects that influence trends in the energy sector (Mason and Mor, 2009). Referring to globalisation, factories or firms continue to increase the demand for oil in their bid to guarantee extended operations. It is also necessary to point out that wealth has increased in emerging markets such as India, Brazil and China. Moreover, the developing world's demand for oil also continues to increase. Regarding the role of globalisation, one needs to note that transportation greatly contributes to high levels of consumption. Increasing transportation across the globe would continue to push the demand for energy upwards. In respect to energy security, long-term anxiety over the sustainability of energy continues undermining the sector (Tester et al, 2005). These factors compound the energy problem and allow energy producing countries a point of leverage in the conduct of business.

The worth of oil in driving economic activities is unnerving. The Middle East has incontestable significance in the energy markets. To support the assertion, the Iraq invasion in 1990, the Iranian revolution of1978 and the oil embargo in 1973 highlight the importance of the region to the globe in reference to energy supply (Cordesman, 2006). Focusing on the period between 2007 and 2009, the globe was experiencing financial problems. However, oil-exporting countries from the Middle East did not suffer from the credit crunch (Bezjak, 2010). Although there is no ample evidence to cite the possession of oil as an influential factor, reviewing its role would help highlight its role in enhancing economic stability.

Al-Iriani (2005) also concedes that the link between oil consumption and economic growth is critical in the field of economics. The increasing interest in the relationship between consumption of oil and economic growth gains prominence based on the notion that oil prices are always unstable. The increasing oil prices affect the oil importing countries in unprecedented ways. As a result, countries have been forced to explore alternative sources of energy to reduce their dependence on oil products. One way of reducing dependence on oil producing nations is opting for energy conservation. The preference for energy conservation affects economic growth (Al-Iriani, 2005).

Production levels and oil prices are a critical component in the Middle East countries. Although efforts to diversify economic opportunities persist, overreliance on oil production is dominant (Bezjak, 2010). The instability of prices of energy products undermines States' reliance on proceeds from the trade. For instance, in 2008, a barrel of oil was attracting one hundred forty-seven dollars (Bezjak, 2010). However, in 2012, the same quantity has fallen to eighty dollars. This reflects a shaky attribute of the energy markets. Thus, dependency on the product would be unhealthy for an economy. Nevertheless, such concerns could be redressed by working on approximate figures when drawing budgets.

The limitation of energy sources in terms of renewability and spread indicates that the long-term future of  supply and demand for energy at the global stage intricately depends on the Middle East region (Cordesman and Al-Rodhan, 2007). This establishment has serious implications on the global energy sector. The Middle East countries have leverage in regards to decisions on the management of the energy resources (MacKay, 2008). In light of this, the other States from outside the Middle East would boost their energy independence by exploring alternative sources of energy. However, since research into alternative sources of energy has not yielded expected results, the dependency on Middle East oil is set to continue. Such a scenario implies that the Middle East would be well placed to influence economic decisions of other countries. Such influence is clear based on the needs of other countries to source for oil and gas from the region. The requirement of purchasing oil or gas from the Middle East would definitely affect the policies that other States adopt.

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The current state of volatility that characterises the oil prices reflects an element of interconnectedness between the supply of oil and the Middle East (Krichene and International Monetary Fund African Dept, 2006). The unfortunate state lies on the notion that oil prices are likely to remain fluctuating since the demand for oil and gas continues to rise while at the same time, supplies are limited and alternative sources are absent. However, the oil and gas reserves continue being diminished.

As seen above, the processes involved in the oil industry has a significant chance of causing environmental issues that require management. The oil and gas industry involves activities included in the processes that cause health, safety, and environment issues. In this regard, safety processes management aim at safeguarding the drilling, sealing, and transportation process to avoid damage to the environment, safety of the personnel, and the general health of the people living around the areas.

The processes involved in the oil industry have a significant chance of causing environmental issues that require management. The oil industry involves activities included in the processes that cause health, safety, and environment issues. In this regard, safety processes management aim at safeguarding the drilling, sealing, and transportation process to avoid damage to the environment, safety of the personnel, and the general health of the people living around the areas. Since April 2010, the BP oil spill has never been fully contained as analysis still report of seepages and leakages from the well. The extensive damage to the environment and the health hazard that the oil leak poses to the environment is big enough to change the socioeconomic aspects associated with the Gulf of Mexico. However, considering that most oil spills have been used as examples for the oil industry, keen management approaches are being applied through government interventions. Currently, the judiciary has intervened in the case of BP oil spill and is charging the then CEO of BP with various charges of negligence and failure to take stern action.

In the wake, of a new wave of technological advancements, the oil industry is much concerned has implemented technology that is able to control process and ensure safety. Management means the planning, organizing and implementing of strategies that work towards healthy addressing of project processes. The reason that surveyors and geologists are deployed in areas with oil and gas deposits is to identify the depth of the deposits and the amount of pressure at which the deposits may contain. In the issue of toxins and contaminants, samples are taken from the deposits and examined before the projects can commence to determine the elements present as well as the possible outcome if such elements came to contact with the environment. As of the 21st century, technology has helped the oil industry to determine the causal aspects of disasters. These causal aspects include instability of the crustal rocks, the amount of pressure that has built up due to high temperatures. In this case, determination of aspects that may cause health and safety issues have been addressed. 



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