Market Imperative- Petroleum

Market Imperatives
Petrol has played a major role in the world’s industries productivity for decades. In most cases, it plays a serious role in determining the expansion of economies across the world including that of the big industrial nations such as United States.

Most of the petroleum deposits are found in zones such as the Middle East, Africa, South America etc… These individual nations of 13 decided to come together to create the Organization of the Petroleum Exporting Countries (OPEC). Their main goal is to act in their individual and group interest to maximize profits for their own people. In that regard, they have huge leverage in controlling price inflation and regulations that will benefit them. They control two-thirds of the world’s oil reserves.In this view, they have become very instrumental in determining the expansion of economies around the world. The United States economy for example, is greatly affected by the price of oil. The United States has about 3% of the oil reserves but consumes about a quarter of the world’s oil. A high price has helped lower the power of the dollar and reduced the demand for big cars worldwide. Ford, GMC and many auto manufacturers are now embarking on making more fuel efficient cars. The demand has gone down.The worldwide effect of petrol has spiraled all the way to hit major worldwide companies even well establised companies such as Alitalia. And today, we all pay higher airfare due to higher petrol prices. Locally, we all pay more for taxi and even the drivers will tell you the reason is "petrol is expensive." Some few nations in OPEC like UAE do benefit a lot while others instead get higher prices for many things including food.

In conclusion, the effect of petroleum in the world’s economy is great. The higher the prices, the less the productivity for many worldwide industries because the world is still HIGHLY DEPENDENT on petroleum. Unless nations embark on spending more to find alternative energy methods or expand use of wind power, solar power etc… it will be hard to forecast the long term profitability of industries worldwide. All being said, petroleum problem in one nation might have an effect on global markets; and this shows how intertwined the worlds market is today.