Assess the extent to which governments shape the global oil economy Essay

Assess the extent to which governments shape the global oil economy. In your analysis, consider the respective roles of nature, industrial structure and war - Essay Example y by oil prices, since it is the major economic activities in such countries factors such as political corruption, foreign debt, militarization, and power intervention are problems that this countries experience. Energy is a key driver of growth and industrialization in this century. The current global economy relies heavily on oil as a form of energy, manufacturing, transport and other key industry depend on oil either directly or indirectly. Some of the household goods as well as cooking gas is as a result of oil, hence, the global population depends heavily on oil. Due to this reasons oil prices have been reported to be very volatile, and this has affected both developed and developing nations. Fluctuations of oil prices shift political balances around the globe. When the oil prices are high the exporters tend to gain power, but face severe challenges when the prices drops (Bridge and Le billion, 2012). The need to control sources of oil has historically made many countries to go to war. For instance, the US paced an oil embargo over Japan, which obstructed 80 percent of its oil supply. This then prompted Japan to join World War II with the embargo being one of their key motivator. Oil industry is a continuous process that involves extraction of oil from the earth. There are two levels in this industry structure, upstream and downstream. Upstream comprises activities such as explorations, looking for oil bearing lands, construction of gas separators and oil well infrastructure. Downstream comprises of activities such as transportation that is sometimes done through pipelines, railroads and tankers; refining, which is the process of converting crude oil to usable products such as gasoline and fuel oil; and finally marketing that is done by setting up petrol stations. This industry is capital intensive despite using sophisticated technology in present times (Bridge and Le billion, 2012). Everything from production requires large amount of capitals and this has