The world runs on oil. Wars are fought over it, people die for it and nobody seems to care. Oil adversely affects our economy and the value of our currency, the cost of travel, as well as many other extraneous variables that are essentially inescapable. In the age of Capitalism it seems, money bleeds oil; a symptom of a sick race of people who still can’t live in harmony with its own environment. Here is a look at how oil is affecting the world. Whether positive or negative, nobody can say that the oil market, despite its failing value, is not one of the most influential corporate entities on the planet.
Oil and Canada
As prices continue to plummet in 2015, Canada as a country may actually benefit from the failing value of oil despite having nearly $60 billion tied up in the industry. This comes from the increased spending power the average consumer will have in the wake of oil costing what it did nearly five years ago.
According to Lynn Moore, assistant city editor of business at the Montreal Gazette, “A sustained period of low oil prices will throw a big wrench into the works of the Canadian economy and collective psyche. Beyond the shifting fortunes of governments and companies that have benefited from high oil prices — or suffered from them — the change will surely play a role in climate-change concerns, pipeline expansions and all manners of consumer choices, notably air travel and vehicle purchases. Investors, as well as governments, may also be more interested in portfolio diversification.”
In addition to causing positive change in regards to the Canadian economy, Barry Munro, leader of the consulting firm EY’s Canadian Oil and Gas Practice, commented in a press release that, “The reality is, outside of the oil and gas industry, the implications of a dramatic drop of the oil price serve as a massive stimulus to the economy”.
Russia and it’s “Oil Empire”
Russia has been the focal point of most of the discussions in regards to oil in 2014. Whether it was discussing Russia’s plan to build its XLR pipeline, or its heated debate with Denmark over who should have the most access to the arctic’s oil reserves, Russia has made it clear that they were the oil kings in 2014 moving the most oil since the times of the U.S.S.R.
In fact, according to CNBC, Russia averaged 10.58 million barrels of oil shipped per day despite Putin’s claim that Russia was weaning off oil.
In addition to Russia’s growing influence on the world’s oil surplus, Russia has seen a huge rise in small oil producers which now account for 11 per cent of the country’s total exported oil or approximately one million barrels a day.
Not only has Russia increased its outflow of oil to the world, but it has additionally set its sight on China, one of the world’s fastest growing economies as well as an untapped consumer basis. In 2014 Russia exported 22.6 million tons of oil to China, a staggering 43 per cent increase from 2013.
With the estimated completion of the XLR pipeline slated for some time in 2018, it may suggest that Russia is seeking to use its position in the oil trade to create a monopoly on oil. Perhaps in an attempt to off-set its clear modern Soviet style politics it is playing in Europe and Asia, most notably in the Ukraine, which up until last year, was Russia’s second biggest consumer of oil behind Germany, Russia is clearly trying to throw its weight around Europe using the only weapon it has, control over a vast surplus of oil. Currently, oil and gas fund about half of Russia’s annual budget, putting it in league with Saudi Arabia for gross over-dependency on oil.
Is there really an oil war?
The Oil Wars, sounds scary, right? Well to be honest, there is an oil war currently raging throughout the globe, but not for the reasons you might think. According to Venezuelan President Nicolas Maduro in a live television speech last week, “Did you know there’s an oil war? And the war has an objective: to destroy Russia. It’s a strategically planned war … also aimed at Venezuela, to try and destroy our revolution and cause an economic collapse. It’s the United States that has started the war”.
While this statement in itself may be a little farfetched, it is clear that the Cold-war tension between the U.S and the U.S.S.R still exists today and are being played out in a new field: economic warfare.
As we enter into arguably the last century of oil, it is important to not forget that its takes hundreds of millions of years for oil reserves to replenish themselves so once it is gone, it’s gone. We need to begin looking for other ways to power this world we live in, and hopefully a cleaner, greener and more sustainable method at that.
“The reality is, outside of the oil and gas industry, the implications of a dramatic drop of the oil price serve as a massive stimulus to the economy” – Barry Munro, leader of consulting firm EY’s Canadian oil and gas practice