Oil And Gas Politics Management Essay

The growing and demand of oil and gas was stable in the first 5 decennaries, but after World War 2 the growing increased exponentially and continued to turn until to day of the month ( Longwell, 2002 ) . The oil crisis in this clip line that the authorities and industries had to face was in the mid 1980s. Furthermore, because of the crisis, of all time since the 1980s it was seen that resources were ever behind demands ( Longwell, 2002 ) . These crises occur when the demands for oil and gas can non be met with the supply bing, many times because it is non acceptable, non because it is non available ( Mitchell, 2002 ) . Many of the geographic expeditions started because of oil being discovered in the Middle East, Russia and northern parts of Alaska, which helped the planetary demands for oil ( Longwell, 2002 ) .

Institutions which were formed due to the surplus and ordinances needed for oil ingestions the Organization of Petroleum Exporting Countries ( OPEC ) was formed in attempts to form shared information between states ( Goldthau & A ; Witte, 2009 ) . After the oil dazes states combined to bring forth a sharing mechanism, known as the International Energy Agency ( IEA ) , set the regulations for the oil and gas industries and modulate the states ( Goldthau & A ; Witte, 2009 ) . Other minor organisations would include International Energy Program ( IEP ) which established exigency oil stocks among members, and the Coordinate Response Mechanism ( CRM ) ( Goldthau & A ; Witte, 2009 ) .

Supply and Demand

The supply and demand of oil and gas ne’er seem to wrinkle, since it is used conspicuously in our day-to-day lives. As Goldthau and Witte ( 2009 ) suggested that the supply and demand for oil and gas were, and ever will be competitory. Longwell ( 2002 ) predicted that since technological developments and progresss are ongoing, the production tendency will be to increase every bit good. However, it was reported that as demand additions, the bing production seems to diminish, since by 2020 about half the day-to-day volume required to run into the expected demand is non on production today ( Longwell, 2002 ) . As it stands there are 40 million barrels per twenty-four hours being sold to the unfastened market. The lone issue within the market is whether or non the security of the supply is acceptable or non ( Goldthau & A ; Witte, 2009 ) . Even though the supply may non be acceptable it is decidedly available, and many times the oil is everlastingly left underground ( Mitchell, 2002 ) . Longwell ( 2002 ) claimed that it is still expected that the demand will increase 2 % per twelvemonth for oil and 3 % per twelvemonth for gas by 2010. Besides, Mitchell ( 2002 ) suggested that by 2020, the scope of oil will be 106 to 120 million barrels per twenty-four hours. The gas demand increases merely a small faster than oil due to the face that is progressively needed for electric coevals, particularly during the last century ( Longwell, 2002 ) .

Monetary value Politicss

Gas and oil monetary values are reasonably connected, increasing and decreasing, with each other. In the get downing the monetary values for oil and gas were reasonably low, but shortly the monetary values started increasing, and continued to make so until the planetary demand and provide met par ( Mitchell, 2002 ) . Goldthau and Witte ( 2002 ) remarked how the monetary value of oil and gas is a map of the market ‘s focal point. It was illustrated that there was no correlativity between the discovered volumes and the monetary value fluctuations ( Longwell, 2002 ) . However, Mitchell ( 2002 ) suggests that economically available oil additions with monetary value while physically available oil may be left in the land everlastingly if monetary values ne’er raise high plenty to cover production costs. Anonymous ( 2009 ) claimed that there was a belief in the oil and gas industry that “ doing-nothing makes money ” ( p. 20 ) . An illustration that Anonymous ( 2009 ) provided was during the Persian Revolution in 1979, oilers were idle off the shore of New York City, waiting for the monetary value of the petroleum to increase before they discharged the lading. Another instance, was when oil and gas operators got rentals for pull outing oil from the Outer Continental Shelf, but it was discovered that no boring had really taken topographic point ( Anonymous, 2009 ) . Therefore, the monetary value strength occurred merely after the passage of Commodity Futures Modernization Act ( CFMA ) was established in 2000. Overall, as oil monetary values addition, so do demand for energy ( Shaffer, 2005 ) .

Rules and Regulations

Governments are responsible to do statute laws, revenue enhancements, and ordinances for the oil and gas industries, where public policy and regulative pattern is besides of import ( Clancy, 2009 ) . Clancy ( 2009 ) discussed some of the policies such as ocean policies, as to non foul, and societal policies, for occupation population, to assist modulate the oil and gas industries more expeditiously. After hearing about the Outer Continental Shelf incident there were hearing boy statute laws for interior secretary, in attempts to specify and implement diligent development from the Outer Continental Shelf rentals ( Anonymous, 2009 ) . Acceptability of oil supplies are taken attention by the environmental curates and sections, caputs of authoritiess, and are normally debated in civil society ( Mitchell, 2002 ) . Mitchell ( 2002 ) besides discusses the limitations against Iran and Libya of developing their oil industries because they are under the US countenance. Besides that, oil and gas are the most extremely valued market and this is demonstrated by the degrees of revenue enhancements that transporters are willing to pay to transport oil and gas. It is a misconception to believe that fuel policies will cover all jobs of metropoliss ‘ ceaseless demand. However, the high fuel revenue enhancements in Europe for oil ingestion lead to efficient and low-consumption autos. Overall, oil grosss avoid the demands for other gross beginnings for authoritiess.


It was confirmed that authoritiess base on ballss policies and concepts establishments, both internationally and regionally, to assist equilibrate the correlativity between the supply and demand of the oil and gas industry. The oil and gas ingestions are of import for fostering economic growing in the industrial universe ( Longwell, 2002 ) . Monetary values of oil and gas are related to authorities ‘s political ways to increase net income. Research and geographic expedition in happening new and to conserve the bing oil and gas resources have prospered and will go on in the hereafter ( Longwell, 2002 ) . Furthermore, many incidences lead to several statute laws, ordinances and organisations being created on behalf of authoritiess in attempts to cut down otiose ingestions of oil and gas. The oil and gas industry has ever impacted the political facets of the industry internationally and regionally, and will go on to make so in the close hereafter.