Effects of oil industry on global society/ economy.

Essay by jessaesUniversity, Bachelor'sA+, May 2005

download word file, 2 pages 1.0

Global Economics and Oil Prices

Oil and fossil fuel production and consumption began with the industrial revolution. Some people even claim that the level of industrial success in the world would never have been accomplished if it weren't for easily accessible oil at cheap prices. Historically speaking, high oil prices have tended to cause or coincide with recessions, while lower oil prices have coincided with economic prosperity. Since the industrial revolution, fossil fuels, oil in particular, have been and still are very important to the global economy.

Before the 1970's, the global oil market tended to expand at dizzying rates. The world believed that there was no end to the world's oil supply so prices stayed relatively low. Then the world became disillusioned with the oil crisis and increasing oil prices. The immediate effect was economic and political turmoil. The longer term effect was increased exploration efforts and energy savings.

The oil consumption has gone up somewhat since the seventies, but the peek of oil consumption is far behind us.

Many geologists believe that we will soon see a peak in oil production. The easily accessible potential oil fields have been explored, and the most likely places have been drilled. It is becoming increasingly harder to find new oil. There are also indications that remaining oil reserves are not as large as are officially stated. When one combines this fact that oil will one day run out with the problems the world is currently seeing in the Middle East, where the majority of the world's oil supply comes from, the only logical and likely outcome will be a rise in oil prices. In fact, today in the US commodity markets, oil is at an all time high. At the rate that oil prices are raising, soon it will no longer...