We do not presently have a good relationship with many of the Middle Eastern countries and this means that they are selling us the oil we need at a higher price. One solution to the gas crisis is to reconcile our differences with the Middle Eastern countries.
But the animosity between us and the Middle East have been long occurring and a reconciliation attempt would result in a long and grueling negotiation with a lot of compromises from the U. As stated before, America is the largest consumer of gasoline and other fossil fuels in the entire world.
If there was a way to rely on other means of energy such as solar, fusion engines etc. The idea of a solar or battery powered car is not a new concept but perhaps an overlooked one. Today one could purchase such an automobile and then never need to buy gas and no longer need to worry about the cost. Such technology, however, is not only risky and hard to maintain, but it is also very costly.
Electric cars are known to cost a minimum of 30, dollars and though money is saved over time, it is still unappealing to the frugal American public. Experimental solar and fusion engines are yet to become available to the public making this an impractical solution. The final argument to assuage the rising gas prices is to drop our trade tariffs on incoming foreign oil.
This solution gives us a quick and effective resolve to our countries problem. Our current system, which was designed to support America and American run industries, puts a certain cost percentage on all incoming non-domestic fossil fuels and thus increases prices higher than they should. If we were to impose no tariffs on the incoming oil then that extra percentage of cost would disappear. Not only is this an effective solution to the problem, it is a fast acting one.
The effects of this resolution would be quickly discovered in a matter of months, and though it is only a small amount of decrease, it allows a small relief to the public and gives more time to create a more long lasting and efficient cure for our nations growing problem.
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Order a custom written paper of high quality Professional Writers only. Free Quote or Order now. Tips for Buying a Car in University. On becoming a student, each one gets a sense of freedom and adolescence. This kind of feeling is rather tempting, as young people realize they.
Public Universities vs Private Universities. The moment comes, when you need to enter a university and get a higher education. This industry has gone through many challenges in history. It began as early as 15th century.
During early years, there were firms that specialized in producing, refining and selling the oil products. These firms enjoyed monopoly. Later on, states decided to take ownership of the oil fields. The oil supply chain is composed of three levels. There is upstream that is involved with the exploration and production of oil. There is midstream that is involved with storage and transport of the crude oil.
Then there is downstream that is concerned with refining the crude oil into its constituents and then distributing them o the consumers. At all these levels, many actors are involved. The key actors are the government and the oil companies. The three main types of oil companies are the integrated oil companies, the national oil companies and the independent companies. Politics has a direct effect on the oil supply chain.
Wars also impact the oil industry negatively. Oil Industry, world economy, oil supply chain, actors in the oil industry, politics and war, Oil is a very crucial resource in the world Inkpen, , 1. Undoubtedly, it is the only resource that runs the world economy according to Inkpen , 3. There is no economic activity that would run without it. Consider transporting of goods and services from one place to another.
Oil must be available for the transport to take place. Consider the heavy machines that are used in factories in the process of manufacturing of products for sale. It is a fact that all these machines would stop running in the absence of oil. It is sensible to state that there is nothing that can remain stable in the absence of oil.
In other words, the whole world would literally come to a standstill without oil. In other words, because of its importance, the entire world is affected by anything that concerns oil.
In the oil supply chain, main actors play a part. These actors are encountered from the point of oil exploration to the point of oil processing and consumption. They control many aspects of the oil. Besides, they make important decisions regarding oil. Their decisions have far reaching consequences even at the level of the consumer. Historically, oil resource has been subjected to stringent control by these powerful actors. In this paper, the historical background that surrounds actors in the oil supply chain as well as the future of the oil industry is brought to light.
Oil has been used over a longlong time. It started being used in 15th century. Its management has undergone numerous changes over time. Initially, oil sector all the way from exploration to processing was done privately by companies. Slowly by slowly, the national government started getting engaged in the matters of the oil sector and taking a share of ownership of the sector. Presently, national governments have taken over the control of oil resource.
Oil fields have been classified as sate resource and, therefore, should benefit the government. It is worth noting that the struggle to achieve the principle of state power over the oil resources has not been a simple one.
In Mexico, the state managed to claim state ownership of oil fields in In addition, it was able to gain autonomous control over the same in It is this Act that provided the guidelines for reclaiming oil resources into state ownership.
However, in the US, the process of converting oil fields into state owned resources has been slow. In the recent past, the state allowed private individuals to have absolute control over the oil fields if they were within their territory. The state only owned what was present in the federal land. Nevertheless, this has changed because as at present, the state has taken over the ownership of oil fields and converted them to state properties.
Ownership of oil fields notwithstanding, transport, distribution and processing of oil has undergone tremendous changes. Strong organizations have come up to control the entire supply chain of the oils. In simple terms, production and supply of oil has created a very sophisticated network. Political shades also crown the industry. Powerful actors control this fundamental resource.
Therefore, oil industry is a very dynamic industry Inkpen, , 1. There are many actors in the oil industry. These actors are responsible for everything that happens in the oil industry. They are in charge of oil exploration, oil excavation, distribution and even refining before reaching the final consumer. It is important to state that the same actors also are involved in setting up prices for the oils.
They control the volume of supply as well as its reliability. They dominate the upstream, the midstream and the downstream of the supply chain.
At the upstream, the activities taking place are exploration and production of the oil. At the midstream level, the main activities taking place are storage and transportation of the oil. The downstream level of the supply chain is characterized by refining of the oil, distribution and consumption. The actors are mainly the states and powerful firms. These actors are powerful and the decisions that they make have far reaching consequences.
They include the states that exercise their power as landlords of the oil resources in the nations that produce it, as champions and as regulators. They mostly dominate the upstream level of oil supply chain. Firms play a part in the integration of the oil resources.
Usually, they are created by the oil producing state or states that are main importers of oil. They can also be formed by representatives from several states that share a common element such as oil production. Firms mostly dominate the midstream level of oil supply chain where they exercise their power on the storage and transport of crude oil. They also exercise power at the downstream level where they control refining processes, distribution and prices for the end consumer.
In short, the oil supply chain is a very complicated network. This network has brought nations together because of shared common goals. In the subsequent paragraphs, each actor in the oil supply chain is analyzed and its impact in the supply chain assessed. It has already been stated that national governments are in control of oil resources. These states are especially those which are principle producers of oil.
These states are interested in generating revenues for the government. They set conditions under which the firms that will operate within their territory abide to. For instance, in the UK, the national government, through the Crown, issues licenses to firms that are interested in the search and production of oil and gas. The state has absolute power in deciding who to access the oil resources with regard to domestic and foreign firms.
Political dimensions and considerations have a great role to play. The state also gives directions on which resources are available and which should not be accessed. In addition, the state determines the impact of resource extraction to the environment and gives an appropriate direction. It has the power to halt a process that has already begun if it is deemed that the negative impact in the environment cannot be controlled.
It is also the role of the state to determine what the government stands to gain in any deal with a firm. It also champions local employment. In a nutshell, oil resources in the world within national territories are subjected to national political considerations in that nation. Therefore, oil firms have to contend and sing to the tune of the oil-producing states. Similarly, states that import the oil must create a good rapport with the exporting state in the political sense.
States also participate in National Oil Corporations as investors. Most of the top class oil companies are owned by state. These national oil companies dominate the world oil reserves and production. They are involved in determining the volume of oil production by the state. States opted to getting involved in the oil companies in order to make their oil companies have a superior bargaining power internationally. For example, in the Middle East, the government found it necessary to participate actively in the oil companies in order to survive in the international competition by the international companies.
In , Iraq made Iraq oil company a national company. These are just a few examples to show how states have decided to dominate the oil sector at all points. As far as exporting is concerned, national oil companies have a greater bargaining power. They can also access a wider market than private companies. Thus, it is to the benefit of the exporting country to consider nationalizing oil companies. In addition, states that import oil have national oil companies.
Nations like South Korea, India and China have expanded their national oil companies overseas so that they can have access to the oil reserves easily. It is important to note that national oil companies in the importing states have an upper hand when it comes to striking deals with the exporting states.
Hence, there is every need for these national oil companies. The deals that are struck at the level of national oil companies are very strong. Furthermore, nationalizing oil companies has helped stop unhealthy competitions among the oil companies. States also play a role as regulators in the oil sector. They set and impose conditions regarding oil production as well as consumption.
It is the duty of the government to ensure that oil production does not compromise the environment to the extent that the lives of the people are endangered. For instance, pollution should be kept in check at all cost in the course of production. Furthermore, the rights of the consumer should not be compromised. The government should not watch passively as consumers get exploited by the business people. Moreover, the state imposes taxation on the oil products hence influencing the prices of these products.
This way, the government can get revenue from the sales of the oil products. Through taxation, the state regulates the rate of oil consumption. The state also sets regulations and conditions that are meant to protect the rights of the workers. This is a fundamental role of any caring government. Its people should be respected. These conditions are imposed on the firms that are operating within the borders of the state.
In short, the government sets out conditions on whether a firm will set out to explore for oil and under which conditions. This influence on the production of oil gives the state an upper hand in as far as its oil resources are concerned.
Coupled with political objectives, the state can impose restrictions on the oil companies operating both within the boundaries and overseas. For instance, the US government suspended all dealings with Libya until over allegations to links to terrorism. Therefore, oil companies in the US could not operate at all in Libya. Similarly, the US government has restricted any of its companies from dealing with Sudan.
Integration is very important in the oil sector. One of its key benefits is to ensure uninterrupted oil supply Inkpen, , 5. Also integration reduces price fluctuations. The reason for this is that integration helps companies achieve economies of scale and attain geographical diversification. The economy of scale is achieved since there is less competition. Also the market is favorable. In addition, there are fewer fluctuations in prices and this makes the firms stable.
They can make better predictions and forecasts in the market.
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