factors influencing the demand and production of oil ib geography i
TRANSCRIPT
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Factors Influencing the Demand and Production of Oil
IB Geography I
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FactorsPolitical
Social
Environmental
Economic
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Political Factors
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International RelationsIf your country depends
on foreign imports of oil, it is very important that you are able to maintain good relations.
This is not always possible
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Political Instability Many countries that are rich in oil are politically
unstable.
Political instability can affect supplies and cause price increases.
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Emissions Quotas• International
agreements on setting greenhouse gas emission quotas.
• With targets to meet, more countries are looking to invest in alternatives (renewable energy that pollutes less).
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Carbon Taxes
If carbon taxes are introduced it will greatly increase the value of oil products, making alternatives relatively cheaper and more attractive.
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NGO Pressure • NGOs are becoming
increasingly vocal in their fight against fossil fuels and promotion of greener alternatives.
• As more consumers listen to NGOs, governments and energy companies are likely to find alternatives
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Social Factors
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Human Cost of Protecting Supplies
• Many argue that the only reason the US invaded Iraq was in search of new supply of oil.
• Whatever, the reason the US has lost many of its soldiers protecting supply lines, not to mention thousands of Iraqi's who have lost their lives in the ongoing occupation.
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Public Image• Because of rising prices
at the pump, the link to global warming and oil spills are all giving the oil industry a bad image.
• Because of this countries and energy companies are looking for alternatives.
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Public Health
Oil used in vehicles, planes and industry all contribute to air pollution, which can have a negative effect on the health of people - especially asthma.
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Exploitation of Workers and Countries
• In many countries dangerous jobs are carried out by poor unskilled workers.
• Many countries are exploited for their wealth and the temptation of oil wealth can lead to the creation of kleptocratic governments.
• The Niger Delta in Nigeria
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Environmental Factors
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Greenhouse Effect and Global Warming
• Fossil fuels are all major contributors to the greenhouse effect.
• To try and reduce the effects of global warming, many countries are trying to reduce their dependency on oil.
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Oil Spills• When large quantities of
oil are transported by sea or pipeline, there is always the risk of accidents.
• The Exxon Valdez spill (Alaska) in 1989 is one of the most tragic examples of the short and long-term damage an oil spill can cause.
• The more recent BP oil spill in the Gulf of Mexico is a more recent example.
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Damage Caused by Extraction
• The recent BP oil spill in the Gulf of Mexico is just one example of how extraction can lead to environmental damage.
• The Niger delta in Nigeria has also seen large-scale environmental damage caused by extraction.
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Economic Factors
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Transportation CostsBecause the cost of oil
is so high, transporting oil is also extremely expensive.
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Price of Oil• The price of oil is very
vulnerable to changes in demand of oil.
• With current disruptions to supply and growing demand the price of oil is currently over $100 a barrel.
• As the price of oil increases the cost of alternatives become much more attractive.
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Demand for OilAs the world's
population exceeds 7 billion people and as countries become richer, the demand for oil (and the price) will steadily increase.
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Finite Supply• Oil is finite, estimates vary but many people
believe that we have nearly reached maximum production (peak oil) and over the coming decades we will see a decrease in supply.
• As supply decreases countries will be forced to look for alternatives.
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Domestic SuppliesMany countries like the UK are seeing their own
supplies of oil run out.
Because of this the UK is looking for alternative sources of energy.
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Increases in Extraction Costs
• As world oil supplies run out, companies are having to extract oil from deeper underground and in more inhospitable places.
• These increased extraction costs will ultimately the cost of oil is more expensive, making it less attractive.
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Investment in Alternatives • As the supply of oil runs
out, energy companies and countries are investing in alternatives.
• This is becoming increasingly profitable with the price of oil, but with the knowledge that oil will run out, many want to become market leaders.