The paper "Oil Prices: Keeping It to Themselves, Gulf States not Only Pump Oil, They Burn It, too by The Economist" is a delightful example of an article on business. The issue discussed in this article of The Economist is concerned with the production, supply, and usage of petroleum and its products in the Gulf countries to the rest of the world. It is an ironical fact that only the Middle East countries are rich sources of oil and that oil is a necessary commodity used by people throughout the world for various purposes. Oil is a rich source of energy production besides nuclear, thermal and hydro energy. In fact, most of the Middle Eastern countries use oil to generate energy for further consumption. Researchers accuse these countries of using up more than 10% of the oil produced in these nations. Besides limited sources for oil production, other issues include the political challenges that exist between some of the major oil-producing nations, like Iran and Iraq and the rest of the world. Recently, sanctions have been imposed by the US and Europe on trading and other relations with Iran, which has further limited sources for oil. Iraq is faced with many internal political, governmental and financial challenges, which makes this source not an ideal option for oil trading. Compared to Iran, Saudi Arabia is the largest producer of oil in the world but also one of the largest consumers of oil in the world, only next to Canada and the United States.
Due to situations in Iran coupled with rising demand from larger countries like China, oil prices have become highly inflated and are fluctuating. Iran’ s strength owing to its oil reserves only remain till it receives expertise and equipment from outside; once sanctions are imposed, these oil reserves will not be able to produce oil or give much support to the Iranian system. Secondly, the consumption rate in Saudi Arabia is viewed as an alarming factor by the rest of the world because not only oil is used in these regions heavily but also at subsidized rates, which creates a lack of control. The Western nations have alarmed many oil-producing countries on controlling their oil consumption and to cut prices; however, attempts by these countries have been unsuccessful owing to violent protests from citizens as well as political rivals. The main highlight of this article is that most nations are worried about the way oil usage and trade is managed by the Middle Eastern nations, which is also a warning sign for resulting in its scarcity.
The scarcity of oil can be extremely dangerous for most nations that use oil as the base for producing energy and those that import oil for domestic consumption. Changing lifestyles and increasing costs of living are also resulting in increased consumption of crude oil. The Middle East alone has increased its consumption of crude oil by more than 50% in the last decade; China is on the same trend.
Crude oil is one of the most important determinants in the stability of the economy and international trade. Although crude oil reserves exist in other places like some parts of Africa, extraction, and usage of oil from these parts is extremely difficult for the amount of effort, costs, time involved and amidst existing political, governmental, law and order challenges.
Hence, the point that The Economist highlights is that all nations must realize the significance of crude oil conservation in the near future and take appropriate steps in order to ensure crude oil production continues to take place and help the world nations lead their activities and lives in normalcy.