To what extent do governments shape the global oil economy In your Essay

To what extent do governments shape the global crude economy In your analysis, consider the role of nature, industrial structure and war - Essay Example perpetual discovery of new oil fields is necessary to avoid depletion of current reserves however this is gainsay from both economic and business perspectives. For instance, in Canada the oil reserves are difficult to correctly invoice because of technological difficulties leading to high cost involvement. On the other hand, oil reserves in Alberta which are now considered second largest oil reservoir were considered as non-economical to develop in past decades (Inkpen, 2012, p.2). One of the intimately important aspects of oil industry is that rich and poor nations alike are consumers of oil. However, since oil is location-specific therefore just now a specific number of nations are major oil producers of the world. Over the last decades, the developed nations bring on become leading importers of oil which has resulted in sev ere geographical and political issues. Oil industry is atomic number 53 sector which has experienced large scale government hinderances and regulations ranging from taxation to control over production. OPEC represents government intervention on a global scale (Inkpen, 2012, p.4). For five years Saudi Arabia which is OPECs largest producer sphere controlled price by reducing production during phases of excessive supply and increased production during phases of low supply. It could bear because of low population and excessive production. Thus Saudi Arabia along with other OPEC members strived to maximize their oil revenues in the short run (Spero & Hart, 2009, pp.346-347). OPECs goal is to sustain the bargaining power on oil producing countries by controlling price. The idea is to ensure smooth distribution of oil to consumers, producers getting their regular profits and investors earning medium returns. However, OPECs capacity to fulfill its mission is controversial since increa sing oil prices in the 1980s resulted in storing up of oil by producing countries and new exploration