Continuously increasing industrial development worldwide has brought incredible change for
the last century. It has improved the way of how people live and brought about a vast number
of scientific applications. But success is not without sacrifice. With the fact that the factors of
production are nothing but limited resources, oil is the paid price.
Oil crisis is never a new phrase, as early as the 1970's, the demand and supply of oil has
been wobbled by different interests of those that are on power. On the early days, particularly the 1973 oil crisis, oil embargos were issued by the OAPEC, an independent subset of OPEC, against the supporters of Israel on the Yum Kippur War. Oil price was inflated indefinitely with respect to the interests of the Arab producers against the United States, Japan and countries on Western Europe. Demand of oil drastically dropped in the United States prohibiting industrial growth and flared the need of new social and economic reforms. Non-OAPEC countries like Mexico, Nigeria, and Venezuela ripped high profits being substitute oil producers. On the other hand, the demand for oil-efficient goods like compact cars helped countries like Japan ensure a suited future . It was also during this crisis that Japan decided to concentrate more on electronic developments rather than those that involve direct oil consumption increasing the supply of such goods. [2]
A second crusade erupted, the 1979 oil crisis, which marked the start of what was then called
the 1980's oil glut. Iran, faced with the blooming Iranian Revolution and other internal conflicts, forgot about their oil industry. Other OPEC members increased their production to compensate with Iran's but worldwide panic brought an unprecedented inflation. Decreased demand in crude oil together with its high production rate resultd to a temporary market surplus. This glut in oil caused a continuous decline of oil price for six years, until 1986 when it started to fluctuate.[3][4]
The present oil crisis which eventually started on 2003, unlike the old ones, does not only concern that of world powers implicitly battling against resource domain. The increasing development of third world countries and the increase in population ensures an inflated demand. Given the fact that the majority of world industries depend on crude oil as fuel, either directly or inderectly, lag in the worldwide economy is seen. Thus, the concept of peak oil is realized. Peak oil is the point in time when the maximum oil production is reached, after which its rate continously decline. This and the increasing demand from rapid urbanization and heightening standard of living serve as a catalyst for an ensured permanent oil shortage. [5][6]
As oil reserves decrease, its price is eventually controlled by demand. In fact, the dependency or independency on petroleum oil decides whether we survive the following centuries or not, but it is easier said than done. The emergence of newly developed countries like India and China rely on economic models or at least learn from those they succeeded, like the United States and countries of Europe. But we note that heavy dependence in petroleum oil served as an important ingredient in the emergence of such powers, especially on the time of the Industrial Revolution. Independency from oil requires new economic, social and political frameworks and techniques. Failed mitigation will result to worlwide market imbalance and energy crisis. [6][7]
The inevitability of such catastrophy prompts the need for substitute energy sources and the
mitigation of peak oil. By decreasing the demand of oil and inclining to substitute renewable energy sources like the sun, biofuels, hydro-electric and biomass as soon as possible detaches us from larger problems. And by the principle of supply and demand, renewable energy industry will be a profound success. Cities like Masdar in Abu Dhabi will be the standards of survivability and living. World power may shift to other countries and economic balance may then be defined by new different entities. Some industries may fall or succeed or be unaffected. [4][8]
Everything relies on the decisions of those that govern us, either explicitly or not. Certainty
of survavibility is dependent on how well we react to such a problem. In any way, solutions may
provide answers but they also create new problems. With the fact that politics is an unfortunate backbone of economics, a real solution can never be achieved.
the last century. It has improved the way of how people live and brought about a vast number
of scientific applications. But success is not without sacrifice. With the fact that the factors of
production are nothing but limited resources, oil is the paid price.
Oil crisis is never a new phrase, as early as the 1970's, the demand and supply of oil has
been wobbled by different interests of those that are on power. On the early days, particularly the 1973 oil crisis, oil embargos were issued by the OAPEC, an independent subset of OPEC, against the supporters of Israel on the Yum Kippur War. Oil price was inflated indefinitely with respect to the interests of the Arab producers against the United States, Japan and countries on Western Europe. Demand of oil drastically dropped in the United States prohibiting industrial growth and flared the need of new social and economic reforms. Non-OAPEC countries like Mexico, Nigeria, and Venezuela ripped high profits being substitute oil producers. On the other hand, the demand for oil-efficient goods like compact cars helped countries like Japan ensure a suited future . It was also during this crisis that Japan decided to concentrate more on electronic developments rather than those that involve direct oil consumption increasing the supply of such goods. [2]
A second crusade erupted, the 1979 oil crisis, which marked the start of what was then called
the 1980's oil glut. Iran, faced with the blooming Iranian Revolution and other internal conflicts, forgot about their oil industry. Other OPEC members increased their production to compensate with Iran's but worldwide panic brought an unprecedented inflation. Decreased demand in crude oil together with its high production rate resultd to a temporary market surplus. This glut in oil caused a continuous decline of oil price for six years, until 1986 when it started to fluctuate.[3][4]
The present oil crisis which eventually started on 2003, unlike the old ones, does not only concern that of world powers implicitly battling against resource domain. The increasing development of third world countries and the increase in population ensures an inflated demand. Given the fact that the majority of world industries depend on crude oil as fuel, either directly or inderectly, lag in the worldwide economy is seen. Thus, the concept of peak oil is realized. Peak oil is the point in time when the maximum oil production is reached, after which its rate continously decline. This and the increasing demand from rapid urbanization and heightening standard of living serve as a catalyst for an ensured permanent oil shortage. [5][6]
As oil reserves decrease, its price is eventually controlled by demand. In fact, the dependency or independency on petroleum oil decides whether we survive the following centuries or not, but it is easier said than done. The emergence of newly developed countries like India and China rely on economic models or at least learn from those they succeeded, like the United States and countries of Europe. But we note that heavy dependence in petroleum oil served as an important ingredient in the emergence of such powers, especially on the time of the Industrial Revolution. Independency from oil requires new economic, social and political frameworks and techniques. Failed mitigation will result to worlwide market imbalance and energy crisis. [6][7]
The inevitability of such catastrophy prompts the need for substitute energy sources and the
mitigation of peak oil. By decreasing the demand of oil and inclining to substitute renewable energy sources like the sun, biofuels, hydro-electric and biomass as soon as possible detaches us from larger problems. And by the principle of supply and demand, renewable energy industry will be a profound success. Cities like Masdar in Abu Dhabi will be the standards of survivability and living. World power may shift to other countries and economic balance may then be defined by new different entities. Some industries may fall or succeed or be unaffected. [4][8]
Everything relies on the decisions of those that govern us, either explicitly or not. Certainty
of survavibility is dependent on how well we react to such a problem. In any way, solutions may
provide answers but they also create new problems. With the fact that politics is an unfortunate backbone of economics, a real solution can never be achieved.
References:
[1] http://en.wikipedia.org/wiki/Oil
[2] http://en.wikipedia.org/wiki/1973_oil_crisis
[3] http://en.wikipedia.org/wiki/1979_energy_crisis
[4] http://www.oilcrisis.com/
[5] http://en.wikipedia.org/wiki/Oil_price_increases_since_2003
[6] http://en.wikipedia.org/wiki/Mitigation_of_peak_oil
[7] http://en.wikipedia.org/wiki/Peak_oil
[8] http://www.masdaruae.com/
