Countries across the world rely heavily on oil and its byproducts to create much of the energy that their citizens consume. The availability of gasoline to power vehicles, boats and aircraft in the United States of America is dependent largely upon oil that is imported from other nations, and particularly from members of the Organization of Petroleum Exporting Countries (OPEC).
OPEC, founded in 1960, is a conglomerate of major oil producing and exporting nations that are estimated to produce 40 percent of the world’s oil and to possess about two thirds of the world’s known oil reserves. OPEC monitors the worldwide oil market and establishes pricing for oil which affects people throughout the world. According to http://www.opec.org/, OPEC’s mission is “to coordinate & unify the petroleum policies of Member Countries & ensure the stabilization of oil prices in order to secure an efficient, economic & regular supply of petroleum to consumers, a steady income to producers & a fair return on capital to those investing in the petroleum industry.” The organization also sets production quotas for most of its members.
The Associated Press reports that the president of OPEC, Mohamed Al Hamli, has asserted that policies aimed at reducing world dependence on oil could lead to reduced availability in the future. Such declaration is cause for concern since history and the principles of economics demonstrate that reduced supply of a high demand product leads to higher prices. Al Hamli reasoned that the exporting countries have minimal resources and that hefty investments in production when demand is uncertain would be financially wasteful.
The United States and other industrialized nations rely heavily on fossil fuels for energy to fuel vehicles, heat homes and to produce and transport a multitude of other oil dependent consumer products. Nonetheless, concerns about the limited nature of oil, unrest about the environmental impact of oil and a long held dependence on imports of foreign oil have contributed to a substantial movement to reduce dependence on oil for energy.
The emergence of alternative forms of energy, such as wind energy and bio fuel is threatening to weaken world reliance on fossil fuels for energy in the long term. However, the tremendous extent of the world’s reliance on oil and natural gas suggest that any changes impacting the demand for oil that do take place will do so gradually.
About the Author: Bob Jent is the CEO of Western Pipeline Corporation. Western Pipeline Corp specializes in identifying, acquiring and developing existing, producing reserves on behalf of its individual clients.