How Oil and Natural Gas Shape Global Economy

Introduction

Oil and gas energy have been identified to be the bedrock of today’s modern economy. Despite oil being a crucial factor in the sustenance of most economic activities, it would be incorrect to assume oil does not impact the global economy in both negative and positive ways (Okogu 5). As a result, a lot of questions have been asked regarding the impact of oil and gas in shaping the global economy. Current statistics portray most global activities as virtually dependent on oil and gas supplies and at the same time relating a number of global economic and social injustices to the pursuit of oil by many nations (Seitz). This study seeks to analyze and answer a few of these questions plus identifying possible actions to remedy the situation.

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Does Oil and Gas Industry Affect Global Employment?

Practically, all individuals and global industrial sectors are impacted by the oil and natural gas industry. For instance, global oil and gas prices have been known to affect almost all sectors of the global industrial economy. Needless to say, most industrial activities support global employment at almost all levels of production and service activities; be it supplies, distribution, sales, transportation, manufacturing, research and development or any other levels of the economy.

It is therefore imperative that the oil and gas industry would affect employment levels of any country. For example, if there is a hitch in the oil and gas industry, transportation would be affected, hence impacting on the livelihoods of people employed in the transportation industry. Oil and gas enables industries to make and sell their products or companies in availing their services to the market hence companies are able to realize profits to support employment. If their operations are disrupted by poor supplies of oil, it means their operations will be disrupted and profit realization won’t be experienced.

A counter effect will be realized on employment levels because companies won’t be able to pay their employees because they won’t have the money to do so. People will then lose their livelihoods and therefore lead to high unemployment levels in a country. Nonetheless, oil and gas industries supports employment directly as regards workers at oil and gas fields and those directly employed by oil multinationals and companies as licensed or franchised agents. The oil and gas industry therefore greatly supports employment levels across the world (LaTourrette, p. 12).

Have the Effects of Oil and Gas Fueled Green Energy Solutions?

Burning of oil and gas has been scientifically proved to affect the global environment in terms of global warming. This has beckoned most industries to seek greener energy solutions that are deemed more environmentally friendly. The automobile sector has been on the forefront in this quest with most companies undertaking research and development projects to develop cars that are powered by alternative energy sources (Haller, p. 65).

It is now evident from recent developments that car manufacturers are developing vehicles that are powered by electricity and solar. Not only in the automobile sector has the quest to develop green energy solutions been undertaken but the industrial sector has also joined the cause to free the world from detrimental effects of oil and gas use. Environmental summits across the globe have also been organized to debate this cause and Western nations including UK and US have been identified as the number one carbon emitters contributing to the global phenomenon. Western countries have therefore embarked on research and development to come up with green energy solutions to reduce reliance on oil and gas.

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Has Oil and Gas Reserves Led to the Emergence of Oil Economic Powers?

The high demand of oil and gas in the global economy has led to the emergence of economic powerhouses in the global map due to huge oil reserves. The surge in oil and gas demand has greatly contributed to this phenomenon, especially in the Asian economies such as China and India which now pose the biggest energy markets in the world including other Latin American countries such as Brazil (Okogu, p. 7).

As an attestation to this, the Middle East has greatly emerged as a formidable economic force in the global map due to its extensive oil exports. As a result, huge economies like Dubai have spontaneously developed as the world seeks more oil to run its economic activities. Countries initially almost non-existent such as Saudi Arabia tremendously emerged in the world map as economic super powers. However, the opposite has also been observed with economies collapsing due to depleted oil and gas revenues like Bahrain which exhausted its oil and gas revenues in the 1970s, greatly contributing to the decline of its economy. This goes to show the power of oil and gas reserves in making or breaking a nation. Other economic powerhouses have also been realized in Africa like Libya and Algeria because of their heavy endowment in oil and gas supplies.

Does Oil and Gas Affect Global Economic Relations?

Since oil and gas demand is a global phenomenon, no single country can autonomously fulfill its energy needs without the collaboration of other countries. The global economy has been greatly influenced by international relations primarily defined by the supply and demand of oil and gas. Multinational companies have been known to set up businesses in foreign economies across the globe to explore oil and gas reserves. This can be evidenced through invasion of European and American oil and gas companies in African countries such as Libya, Nigeria and Algeria which are greatly endowed by oil and gas reserves.

International relations are therefore maintained to enhance this economic collaboration with sensitive matters between countries carefully handled to avoid destabilizing this relationship. The Libyan and Italian relations is a perfect example to this trend as can be evidenced when Italy decided to compensate Libya for the injustices it did during the colonial period. The underlying fact is that Italy is the biggest market for Libyan oil and gas exports. It can therefore be evidenced that both countries are greatly soothing their economic collaboration out of oil and gas relations (Mtsiva, p. 45).

The same situation is also observed in the arrest of Mohammed Gaddaffi’s son in Switzerland which led to Libya halting all its gas and oil supplies to the European Nation as a protest move. Switzerland was therefore forced to release Gaddafi’s son even though he faced charges of murder in the country. Needless to say, Switzerland is also one of Libya’s primary oil markets in Europe. The power oil and gas has in global economic relations is therefore very strong.

Conclusion

Considering the extensiveness and impact of oil in shaping the global economy, it is quite evident that oil supports a good percentage of global employment either directly or indirectly. This is quite dangerous in the current economic landscape because of over reliance on one energy source. It is therefore important that most industries seek other energy sources like biogas, solar or wind power to reduce overreliance on oil and eliminate the threat of unemployment incase oil and gas supplies are disrupted. The threat on the environment in light of global warming will also be reduced through this way.

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More support should also be given to the automobile industry in terms of logistics and finance to enable it undertake research studies for establishment of better, greener energy sources because it defines the transport industry, a crucial element in the global economy. In this manner, global economic relations will be free from influences of international demand and supply of oil and gas energy and subsequent liberation from unjust principles, manifested through arm-twisting by global oil producers (as can be evidenced in the case of Switzerland’s relations with Libya as regards the arrest of Gaddafi’s son). True liberation of the global economy from the negative effects of oil and gas energy therefore lies in the development of greener energy sources that would decrease overreliance of oil.

Works Cited

  1. Haller, Tobias. Fossil Fuels, Oil Companies, and Indigenous Peoples: Strategies of Multinational Oil Companies, States, and Ethnic Minorities: Impact on
  2. Environment, Livelihoods and Cultural Change. London: LIT Verlag Münster, 2007.
  3. LaTourrette, Tom. Assessing Natural Gas and Oil Resources: An Example of a New Approach in the Greater Green River Basin, Issue 1683. California: Rand Corporation, 2003.
  4. Mtsiva, V. C. Oil and Natural Gas: Issues and Policies. San Francisco: Nova Publishers, 2003.
  5. Okogu, Bright. Issues in Global Natural Gas: a Primer and Analysis, Issues 2002-2040. New York: International Monetary Fund, 2002.
  6. Seitz, John. Global Issues: An Introduction. London: Wiley-Blackwell, 2001.

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NerdyTom. (2021, December 27). How Oil and Natural Gas Shape Global Economy. Retrieved from https://nerdytom.com/how-oil-and-natural-gas-shape-global-economy/

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1. NerdyTom. "How Oil and Natural Gas Shape Global Economy." December 27, 2021. https://nerdytom.com/how-oil-and-natural-gas-shape-global-economy/.


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NerdyTom. 2021. "How Oil and Natural Gas Shape Global Economy." December 27, 2021. https://nerdytom.com/how-oil-and-natural-gas-shape-global-economy/.

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