Oil – Understandig Economics

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Oil is called, and rightly so, black gold. Unlike gold, it is not the intrinsic properties or bright color of this hydrocarbon blend that makes it so precious, but it is currently the world’s leading source of energy.
Simply look at the tremendous traffic jams that occur in the big cities at peak times. All these vehicles need to be fed in some way and it is precisely a derivative of petroleum, gasoline, the source that moves them. If we also think that airplanes, ships, trains and even many public transports (albeit less and less) use petroleum products to power their engines, we realize how essential it is for society.
But it is not only important for transport. Oil is used to heat homes in winter and as a raw material for numerous products such as synthetic detergents, nylon, dacron, adhesives, pipes, and of course plastic.
It will suffice with the following examples to understand why oil dominates markets:
• 80-95% of all transportation works with petroleum products
• 50-75% of all oil is used for transportation
• All petrochemicals are made with petroleum
• 99% of all lubricants are made with petroleum products
• 95% of all goods in stores arrive there using oil
• 99% of our food is related to oil or gas for fertilizers, chemistry, tillage and cultivation and distribution
• Oil is the most important source of primary energy on the planet and accounts for 36.4% of all energy.
Our planet currently consumes 1 billion barrels
Every 12 days, and that amounts to 30 billion barrels a year, the equivalent of a giant reservoir. A conversion into liters is even more impressive.
One barrel of oil equals 159 liters and we consume 84 million barrels every day; Or what is equal, 12 billion liters per day. Less than 50 years ago, 3/4 of the world’s energy came from coal; Thereafter oil took a strong impulse to overcome coal as an energy source, exactly in 1967. Today, it accounts for only 35% of the entire world energy budget.
For all this, oil is not only important if not essential to society, unless other alternative energies are discovered. In particular, Spain has a huge dependence on crude oil from abroad, so it has to import from other countries all its daily oil needs, since our country has no reserves of its own. And this is what makes it vulnerable to events in these exporting countries.
There is no doubt that there is a gradual substitution of oil, a natural and inevitably extinguishable resource, by other alternative energy sources, but the pace is being very slow. If this diversification were achieved, the world’s dependence on oil would be attenuated, thus contributing to lowering the current geopolitical tension; In addition, the demand for oil would be reduced and, consequently, the prices. Paradoxically, the high price of oil and its expectations of
Exhaustion are one of the main stimulants for saving
And energy efficiency, the development of other energy sources and large investments in exploration and exploitation in the oil sector itself

Regarding renewable energies or nuclear, the fact is that they are developing weakly, and while in industrialized countries the use of oil for electricity generation is decreasing in favor of natural gas, in the developing countries Tendency is practically the opposite.

To further complicate matters, the relationship between the price of oil and its denomination in dollars on the world market has created a new paradox for the world economy. As the dollar depreciated, especially against the euro, the price of oil has been rising and is going to eliminate the price-competitiveness gains achieved by globalization.

It is unanimous opinion of the analysts that the main forces that cause the fall of the dollar are the fall of the interest rates and the permanent American “fiscal deficit” and “trade deficit”. These and other problems caused by the decline of the dollar, which was the currency in which the resources of the producing countries and the reserves of the central banks materialized from the end of World War II, feed each other and give rise To new levels of conflict between the economic blocs.

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