With oil being the primary driver of economies nowadays, it’s apparent that oil prices are able to make or even break countries. Prices of oil are affected by the market forces of source and demand in each second. Let us nowadays delve greatly into the topic of oil supplies and check out the reason oil items are unstable. For more expert insights on Futures Options and Derivatives, please feel free to pop over to DTN.com when you get the time.
As a lot of you know, most oil-producing nations nowadays are developing countries. We’ll now analyze oil resources from the following countries: Russian Federation, Nigeria, Kazakhstan, Canada, and Venezuela. All of the nations mentioned have the potential to turn into huge oil exporters if they are able to govern their oil production correctly.
Russian federation becoming a nation blessed with big oil reserves indicates the best opportunity in being the biggest oil exporter after Saudi Arabia. Nevertheless, although it’s a great deal of petroleum, its federal government appears to be excited to reserve the oil for their personal taxes and use domestic oil rather than improving the engine oil industry. I feel this might be linked to the corruption that is rampant today where politicians wish to pocket the tax revenue to boost their private wealth.
To include on, even when the Russian government doesn’t intervene in oil is important, the business isn’t driven to improve oil infrastructure and technology due to oligopolies where only major businesses of incredible financial backing are able to survive. Below, government policies have significantly restricted the generation capacity of oil in the Russian federation.
Additionally, with Russia’s oil industry getting dominated by mega-rich companies, Russian engine oil capitalists are much sharper to plunder the nation’s engine oil cash (when oil costs rise) and transport it to their Swiss bank accounts rather than developing oil infrastructure that will deplete their wealth. This is because they know the country is corrupt, hence risky to purchase.
Additionally, with the command of petroleum products in the hands of these private people, it’s tough to determine oil outputs for the Russian federation since choices by humans are determined by private gain and emotion, not considering advantages to the worldwide market and the nation. Having such unfavorable problems, it’s apparent that oil supplies from the Russian Federation will be limited and unstable.
Despite getting the Kashagan oil field, it must be mentioned that the engine oil there’s tough to acquire given the technical immaturity of the country. This problem regarding technological advancement is irritated by the racial conflicts which have tagged the nation risky. Although there are already pipelines designed to bring oil from Kashagan, they’re prone to disasters and military attacks as earthquakes. Such events are certainly really unpredictable, leading to oil provides from Kazakhstan to be problematic.
Additionally, Nigeria is marred by many civil wars where community tensions are already climbing along with crime rates. With that turbulence within the nation, it’s definite to determine that its oil output is going to be unsure. Below, I feel I am right in thinking that Africa is abundant in natural resources but very poor in leadership.
For Venezuela, its President Hugo Chavez is a huge follower of Fidel Castro and is infamous for being a hard line. This is apparent as he invited the Hezbollah terrorist franchise into Venezuela and determined its presence by providing strong government support. His autocratic principle in Venezuela has greatly restricted overseas investment into the engine oil industry, decreasing and limiting the nation’s engine oil output.
To include on, its government indicates a preference in pumping cash into societal and development projects to enhance Chavez’s image rather than the essential oil infrastructure. Such disinvestment has surely reduced the possibility of engine oil capacity Venezuela might have. Accompanied by Chavez’s regime, it’s apparent that Venezuela’s engine oil supplies will be unsure.
Below, most might be surprised about exactly why I incorporated Canada into the listing of oil-producing countries which mostly included the less advanced nations. Although Canada is an advanced nation, it comes with its share of issues for oil supplies primarily on account of its participation in the Kyoto Treaty.
Despite getting a lot of untapped oil in tar sands of Alberta, extraction of the engine oil continues to be an extremely hard job that is carbon-intensive and labor-intensive. Such extraction is going to emit a lot of greenhouse gases that Canada needs to manage due to its involvement in the Kyoto Protocol. Additionally, the procedure needs substantial quantities of natural gas to drive the steam required to get the oil, making the extraction expensive to implement.
To conclude, with worldwide oil supplies being extremely unpredictable, it’s certainly better for us to get ready for the following oil crisis. I have always thought of this: Prepare for times that are bad and you will just know times that are very good. I am hoping you are going to do exactly the same.