Causes of Rising Global Oil Prices Essay

Environmentalists are one the biggest critics against the notion of increasing domestic oil drilling. By increasing the amount of drilling we do in the United States, we increase the risk of disasters like the Deepwater Horizon spill in the Gulf of Mexico. Disasters are hardly the only source of economic damage either, to find oil reserves under the ocean, seismic waves are generated into the ground. These waves bounce off the ground back up to the ship, where computers and scientist can use the results to make educated guesses on whether or not oil is located under the surface. These seismic waves can wreak havoc with marine animals like whales; where in one case over 100 whales beached themselves to get away from the painful experience (Nixon). Using seismic waves does not even guarantee that oil might be located underneath the surface, the only way to tell is to actually drill into the potential finds causing even more destruction for what might be for no gain. Once oil is found and drilling has begun, the amount of damage done to the environment can become unimaginable. The recent example is that of the Deepwater

The U.S. military is fully behind continuing the moratorium on drilling in the eastern Gulf of Mexico. These areas have been utilized for years to develop, test and train a variety of combat systems. In May 2017, Anthony M. Kurta, the acting Under Secretary of Defense, sent a letter to Rep. Matt Gaetz (R-Fla.) expressing the need to continue to drilling ban. Mr. Kurta expressed the need to retain the unrestricted training access to these areas, as multiple military bases, from Pensacola to Key West utilize these areas. Explaining that “Emerging technologies such as hypersonic[s], autonomous systems, and advanced sub-surface systems will require enlarged testing and training footprints, and increased DoD reliance on the Gulf of Mexico Energy Security Act’s moratorium beyond 2022. The moratorium is essential for developing and sustaining our nation’s future combat capabilities.” Increasing the drilling footprint in this region will clearly have a negative effect on the readiness and advancement of our military might. Others in strong opposition to this expansion are the environmental groups.

Another reason against drilling much research has shown that all the oil that will be produced will only last for about six months. The fact that the British Petroleum has greater potential to produce more oil and natural gasses (Markey 2004) than ANWR so why bother with it , supporting the case that drilling is pointless. Then there is the percentage that after oil production of ANWR, the foreign oil dependency will only drop from 56% to 50% (Markey 2004).Then the oil produced would reach the market ten years later after it was produced, leaving the gas price decrease to one percent(Lamar and Markey 12). There was also the reality of natural gases. ANWR does not confirm any sign of them, when President Bush ordered exploration for natural gasses (Klyza and Ford-Martin 1).Again proving drilling pointless.

III. Going through off shore drilling will benefit our country’s economy and increase our stake in the global oil markets.

And finally the third reason why we should drilDo like the idea of having high gas prices, no, neither do I, that’s why I believe we should begin to drill in the Arctic Refuge also known as ANWR(Arctic National Wildlife Reserve). ANWR was established in northern Alaska by congress during the 1980s. Around this time, America found itself in an energy crisis, the energy crisis began to put pressure on the refuge as lobbyist began to influence people on the idea that we should begin drilling in ANWR.

America must wean itself off of dependence on foreign oil, and one valid solution to this problem is offshore oil drilling and production. America’s economy is heavily based on petroleum, as though it is the nation’s blood; a necessity for survival. About 25% of oil produced in the U.S. comes from offshore rigs. Most of the U.S. coastline has been off limits for oil drilling since the early 1980s. Due to environmental concerns after an oil spill off the coast of California in 1969, an offshore drilling moratorium was imposed. Since then, the U.S. has amplified its energy consumption to where it uses nearly 25% of the world's oil. Meanwhile, the U.S. produces about 10% of the world's oil. That has made the U.S. heavily reliant on imported

First, drilling should be approved in the U.S. because it is needed for everyday life. People use oil everyday whether they know this or not, and these are the same people who insists that oil drilling should not be permitted in delicate landscapes. The U.S. has been focusing on offshore drilling, which brings in the most oil every year, according to Applied Hydro-Aeromechanics in Oil and Gas Drilling ‘during the last period large amounts of Americans were paying much attention to their energy uses’(Eugeniy 6) and one of the main sources of this energy consumption comes from oil. Applied Hydro-Aeromechanics in Oil and Gas

Oil companies are still fighting to lift the ban on offshore drilling. Six years after the BP Oil Spill they are faced with new drilling and oil exploration. The practice of offshore drilling is being used to extract and recover oil from the depths of oceans for international consumption. Offshore drilling or the expanding of oil exploration will continue to destroy the marine wildlife in their environment and other industries in the process.

2. More domestic drilling will create $1.7 trillion in bonuses and royalties. (Luquette, G., 2009)

The United States is in a recession and depends on foreigners to fuel our country. Oil companies are taking advantage of the power they have over gas prices and the economy is at one of the lowest points in all of our history. It can be seen that the way things are going now that change needs to occur for America to get back on its feet. Drastic changes will need to happen if we are going to continue to enjoy living in a very advanced and prominent country. By developing proper offshore drilling techniques, and alternate energy, America could eliminate debt and lessen dependence on foreign oil.

The volatility of crude oil prices have been experienced since the end of the 20th century. The March 1999 spikes were experienced due to the restriction of crude oil production and cooperation among OPEC member states, the growth of oil demand in Asia that signified its recovery following the Asian financial crisis and decreased production from non-OPEC countries (Al-Abri, 2013). The world market reacted with a sharp rise in prices with the increase in crude oil going beyond 30USD/barrel in the last quarter of 2000 (Chen, Hamori and Kinkyo, 2014). OPEC countries tried to stabilize prices through the increase or reduction in production to a range of 22USD per barrel to 28USD per barrel (Ghosh and Kanjilal, 2014). The incident on September 2001 caused a deep reduction in crude oil prices, irrespective of earlier decreases in production by exporters that are non-OPEC and quota reduction by OPEC countries. After a short while, prices rose to 25USD per barrel with prices going beyond this in 2004 to about 40USD per barrel (Jimenez-Rodriguez, 2011).

There are two main reasons for falling oil prices - weak demand in many countries due to unexciting economic growth coupled with flowing US production.

Uncertainty of political development in Iran and the ongoing growth of global demand for oil are made responsible for the latest increases of the oil price (Williams, 1-7).

Oil prices and the economy have always had an effect on one another. We only need to look back, and we will see several examples of different periods in time when this has happened. One of the biggest factors that affect the price of oil is geopolitical events. Oil prices tend to soar whenever a particular area that is a big supplier of oil is embroiled in any type of conflict. Conflicts such as civil wars, potential wars with neighboring countries or even event such as a political election that could result in potential unrest in the region usually cause oil prices to rise globally. These economic, military and political factors

From the chart above, we can see that the price of oil increasing from 2002 to 2008, and face a dramatically drop in 2008, and face an increasing trend onwards. The drop in 2008 due to the slow economic growth and reduce the consumption of oil around the world.