Saudi Arabia Is The Major And Dominant Producer Of Oil And Gas Industry Essay

Currently Saudi Arabia is one of the leading producers of oil in the world. However, it is losing its foothold on the market. Many countries, like North America, are increasing their oil production and are looking for ways to become less dependent on foreign oil. The increased competition has caused oil prices to decrease. By producing their own oil, countries not only will increase their revenues, but will also reduce their need to rely on foreign oil. By reducing their need foreign an oil a country does not have to worry that their oil supply will be cut off if they go to war.

Oil has often been referred to as any economy’s lifeblood. Although this is an overemphasis, oil has been the key, nonhuman resource of the economy throughout the largest part of the 20th century. In the book “The Prize: The Epic Quest for Oil, Money, And Power” by Daniel Yergin, the author illustrates the political, societal, economic, and geo-strategic importance of this product.

Several oil-countries have been facing economic and political turbulence as a result of the crash in oil prices, and there is disagreement among OPEC as how to handle the situation. (Krauss) While this is happening, America’s oil production continues to rise, as it inches closer to becoming an energy superpower in production and consumption; and countries that depend on their oil exports face recession.

Two-thirds of the world’s remaining oil reserves are in the Middle East which will make international policy imperative in the future (Campbell 2007). It is

Middle East is strategically important region where mostly world half of oil reserves are located. Three countries: Saudi Arabia, Iran and United Arab Emirates accounted for 57% of total Middle East liquids fuels production. (Liquid fuels production in Middle Eastern and North African countries n.d.) Although due to increased domestic production of petroleum and natural gas, the United States is reducing its dependence on foreign oil with imported liquid fuels, but still oil means a lot to the US as oil prices is determined internationally by what is available for all global consumers. Therefore, to safeguard the security of Oil supply in the Middle East and ensure stable access to affordable oil is in the vital interest of the America. (Mexican crude oil shipments to Europe and Asia are rising as U.S. imports fall

In addition to the US peak oil situation, the US Oil Drilling and Gas Extraction Industry faces heavy foreign market competition. In 2011, the US ranked 3rd in oil production, behind Saudi Arabia and Russia (Energy, 2012). Saudi Arabia’s OPEC governor expects Saudi output to rise steadily beyond 2030 with a 1.5 million barrel per day spare production capacity then (Energy, 2012). Russia holds the world’s largest

The largest world supplier oil company is Saudi Aramco. It is the most profitable company on the earth. Since it is the most powerful oil company, it has a great impact on the world economy. As a result, a strong international relationship was built with the Kingdom of Saudi Arabia. In addition, the strong developing of international relationship with other industrial countries resulted in massive contributions to the politics, economy, and many different aspects. In 1933, Saudi government bestowed oil concession to California Arabian Standard Oil Company (Chevron). The main factor for this grant was to explore the oil in the eastern region of the Kingdom of Saudi Arabia. After discovering a huge amount of oil, part of the

The Energy Information Administration in 2004 released puzzling information that by 2025, Saudi Arabia will have doubled the demand of the oil needed for consumption; 22.5 barrels of oil per day. Maass explains that this information cannot be more than wrong because it is simply discussing the demand for oil without taking into consideration that oil does not last forever and the field that Saudi has currently are growing old. After reconsideration, the EIA retracted their statement and lessened the amount. The author quotes Sadad al-Husseini on the topic of peak oil from his interview, “That’s not how you would manage a national, let alone an international economy. […] You draw some assumptions and then say, Okay based on these assumptions, let’s go forward and consume like hell and burn like hell.” (25). Husseini is the former Vice President of Saudi Aramco, the Saudi Arabian oil company. When Maass asks if Husseini believes the Saudi, or even the world, will ever be capable of achieving the current and projected needs for oil, he simply states, No. Saudi Arabia is just an example of the many countries with, once full, oil fields that are now facing a scarcity amount incapable of energizing the planet. And are surveying new sources for energy to profit form.

Our world economy depends upon petroleum; petroleum, in fact, has shaped the modern world. It has dictated production technologies and methods. It has facilitated the emergence of a worldwide transportation network. It has allowed cites to grow and expand, and determined the spatial landscape of regions. Due to our great need for petroleum, the scope of OPEC¡¦s power surpasses our prowess as an economic superpower, considering OPEC regulates the output and the price of oil from their reserves.

This report will consist of the causes and consequences of the changing price of WTI crude oil and recent trends in the global price of oil. It will also include the effects of the ever-changing price of oil on individuals, business firms, governments and the economy.

According to current estimates, more than 80% of the world's proven oil reserves are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle East, amounting to around 66% of the OPEC total (OPEC Share of World Crude Oil Reserves, 2014). Competition amongst the U.S. and the Middle East has never reached this level before. There is a constant tension between the two countries and refuse to collaborate in dividing the market share equally. Furthermore, as both nations refuse any bipartisan agreement, there is no limiting the production of oil. Each nation is looking to drive out competition by any means. What they don’t realize is if they cooperated and reached an agreement amongst the international community, oil will remain profitable just as it was a few years ago. Though, this is unlikely to happen any time soon, but will eventually cause Saudi Arabia and other Middle Eastern countries to take a drastic decision when their main source of capital plummets due to the current price of oil. Profits are no longer seen in the oil industry. The Price of oil has been selling at around $50-$60 per barrel, not enough to cover production cost. The United States is able to withstand any contraction within the oil sector, as their financial portfolio is diversified, not solely reliant on the price of

relations between Saudi Arabia and Iran has been considered the most significant, lasting effect of the Arab Oil Embargo. However, these changes were much less direct than those in the energy sector. Even though the embargo led to the United States allying with Saudi Arabia when they had previously been enemies, it can be argued that the embargo was not a direct cause of this shifting alliance (Myre). Furthermore, the fact that the United States is now rivals with Iran is more the result of the overthrow of the shah, who was effectively a puppet of the United States, than a consequence of the embargo itself (Myre). While, the effects of these changing dynamics are still seen today and are undoubtedly significant, the relationship between the embargo and the changing U.S. energy sector and policy is much more visible and direct. What’s more, the argument that the embargo most influenced U.S. energy is backed with an abundance of evidence, while the evidence suggesting the changing international relations resulted from the embargo is shaky and tentative at best. Due to this, it is apparent that the claim that the embargo affected U.S. energy policy most significantly is the correct

The story of Arabian American Oil Company (ARAMCO), the United States, and Saudi Arabia is a tale that has been told countless times throughout the history of mankind. ARAMCO is another chapter in the endless saga of empire and global capitalism that has spread around the world with the aid of multinational corporations over a period of several centuries. Many of the techniques used in Saudi Arabia beginning in the 1930s were similar to practices used throughout history as empires expanded and a global economy was formed. Aside from the adoption of several “exceptional” policies in their relationship with Saudi Arabia, ARAMCO continued trends of capitalism established long before the movements towards empire and national economy

Saudi Arabia has an economy that is largely dependent on oil, with the government maintaining the biggest control over the country 's significant economic activities. Saudi Arabia owns about 16% of the global oil reserves and is the number one exporter of oil (Saudi Arabia, 2013). In addition, the Kingdom of Saudi Arabia was instrumental in the formation of the OPEC (Organization of the Petroleum Exporting Countries) group, which initially comprised Iraq, Venezuela, Iran, Kuwait and Venezuela (Energy indicators, 2004). Currently, the petroleum industry constitutes about 80% of the country 's budgetary incomes; about 40% of the country 's GDP and 87% of Saudi 's export earnings. Agriculture, in addition to petroleum products, has been a major contributor to the kingdom’s economy since 1970s (Saudi Arabia, 2013). The country has been able to produce enough agricultural products for their consumption as well as surplus for exportation to the GCC member countries.

Saudi Arabia has an oil-based economy. Shipments of oil account for 87 percent of total exports and for 46 percent of GDP. In recent years, in order to diversify the economy, the government has been investing in telecommunications, petrochemicals, natural gas exploitation and power generation sectors.