Benefits and Drawbacks of Countries Dependent on Oil and Gas Essay

Decent Essays
Essay Question 1 – Global Resources

The distribution of natural resources like oil and gas are unevenly distributed across the world (Stutz, 2007). This essay will explain where the majority of oil and gas is located. Thereafter, the focus will be on the benefits and drawbacks of countries that are dependent on oil/gas. Finally, a conclusion will be given which sums up the most important factors.

Allocation Oil/Gas
The majority of the oil reserves are located in the Middle East. An estimate of 65% of the total worldwide reserves is situated in this region with Saudi Arabia being the country with the most oil reserves. Other large oil reserves are located in Mexico, Venezuela, Russia and Nigeria (Stutz, 2007).

When we look at
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Even though this is still the case in some parts of the world, the majority of these countries applied a state owned control on the extractive industry. This increases a countries’ control over its resources and can therefore tailor its production to the demand, hence avoiding having a production surplus as happened early 1970’s when extractive industries were for the majority owned by western companies (Stutz, 1970).

Weaknesses resulting from being oil/gas dependent
The most common acknowledged weakness of being dependent on oil/gas is the fact that these sources are going to deplete at some time. This phenomenon will be enforced by the increase in consumption over the next decades, as it is calculated that oil supplies would supply worlds demand for another 40 years and natural gas needs for 60 years.The need to be more self-reliant will only increase in western countries, as they will have to develop resources like solar and nuclear energy to substitute oil or gas (Stutz, 2007).

Another weakness for countries reliant on oil/gas is the sensitivity of the oil/gas market. As can be seen on the figure alongside, over the years oil prices were subjected to fluctuations arising from different events like the Iranian revolution and different political conflicts like the Iraq’s invasion of
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