Geopolitics of Oil

Essay by rizkhairaniUniversity, Bachelor'sA, November 2014

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Whoever commands the ocean commands the trade of the world, and whoever commands the trade of the world commands the riches of the world, and whoever is master of that commands the world itself

(John Evelyn, 1674)

Oil is the world's most important commodity. Without oil, today's industrial society would simply be impossible. Oil and natural gas are the fuel for the engine of modern capitalism. It is also by far the largest single commodity in international trade, and the oil industry is one of the largest and most international of all industries in the world. That is why it is important (Sepehri 2002). No other element has shaped the history of the past one hundred years so much as the fight to control the oil reserves of the world. The political and the economic power around oil have been shaped by the control of various influences.

Most of the oil consumed in the world today has moved from one country to another. The companies themselves are exclusively US and Western European origin. But the crude oil is mostly concentrated in a small number of countries in the Middle East and Latin America, and was owned by the governments of those countries. One factor was the fact that the crude oil in these countries was incomparably cheaper than other sources of energy (Parra 2004).

As far as the facts go, a majority of the oil producing nations are politically unstable or at opposing sides with the US. Many of such producers are members of the Organization of Petroleum Exporting Countries (OPEC). Gulf oil is also much cheaper to produce, making it much more profitable. Production costs for Persian Gulf OPEC nations are about $1.5 per barrel compared to about $4.5 in the U.S., $5.5 in Canada,$7...