Despite being one of the leading causes of climate change, oil continues to be the most widely in-use fuel in the world and drives the economy of the wealthiest countries.
Fossil fuels, and especially oil, are the most common source of energy worldwide.
The first oil wells were built in the middle of the 19th century. A century later, with the development of the transportation industry, oil replaced coal as the primary fuel.
Today, oil is one of the most valuable commodities globally and also goes by the name black gold. As a consequence, the countries with the largest oil reserves are the richest. Often that also means that they have more power and influence over international affairs.
The Organization of Petroleum Exporting Countries, OPEC, consists of 14 countries. They represent 30% of world production. Within OPEC, the largest producer is Saudi Arabia. The United States ranks second (18%), followed by Russia (11%).
These countries set the price of black gold. If there is more demand, prices rise; if there is less demand, they produce less not to lose money.
Governments use the price of oil as a weapon to create alliances
Oil producers also create strategic alliances to gain global influence. Recently, Saudi Arabia (representing OPEC) and Russia have teamed up to control oil prices to confront the United States’ growing power.
The Russian government and the Saudi monarchy are often at odds over issues like the Syrian Civil War and other Middle Eastern conflicts. Still, they quickly agree when it comes to making money.
In response, the United States has imposed economic sanctions on OPEC members, Venezuela, and Iran.
Far from harming the companies, these sanctions mainly affect the population and country’s economy, which cannot export their products.
The influence of black gold on our economy
The availability of black gold and its price variation can seriously affect many states’ operations, not just the producing countries.
When crude oil production falls, many other products, transport, and distribution are affected. It gets more expensive to transport them.
Oil is also used to generate energy to run factories and the economy.