Wednesday, October 16, 2019
Economic (OPEC Research Project) Paper Example | Topics and Well Written Essays - 500 words
Economic (OPEC Project) - Research Paper Example This is because oil price is based on US dollar. The change in the value of dollar and how the currency of the importing nation is adjusted with the value of dollar determines the price and hence the demand for oil (Elekdag, 2007) OPEC try to maintain stability in oil supply by decreasing or increasing the amount of oil its member countries produce. They have spare capacity of oil production. OPEC has 80% of the oil reserves in the world. This enables them to supply oil to meet increased demand (Organization of the Petroleum Exporting Countries, 2010). The economic growth in many countries is enhancing the demand for oil. The world is dependent on oil as an energy source because alternative sources of energy are not available and those that are available are expensive. United States leads in oil import. The increasing number of vehicles and increase in population has increased the demand for oil (Elekdag, 2007). The worldÃ¢â¬â¢s most powerful countries are dependent on OPEC for their oil supply. OPEC has oligopoly in the oil market. They have an impact on industrial society. They have a big role to play in the economic development of nations. Their power is demonstrated by the fact that the economies of the world will come to a standstill if they stop their oil supply. They can use this fact for their political advantage to increase their power and control the powerful economies of the world (Goodlaw & Et. Al., 2003). The Federal government has not been able to change their energy policies because the dependence on oil of these countries has not yet been reduced. Alternative sources of energy are not available. The energy policy is a sensitive issue and thus they could not afford to bring about a major change that could result in difficult situations (Obama Biden, 2010). The Federal policy should be reviewed. Overdependence on oil makes the country vulnerable and threatens national security. Alternative sources of energy like biofuels should be used.