Business Environments - Oil Price Development and the Consequences for the Economy.

The first 200 words of this essay...

Coursework - Oil Price Development

Business Environments - Management

I. Abstract:

In the past few weeks certain newspaper reports, magazine articles and TV broadcastings determined the currently rising oil prices as an opportunity to derive disastrous economic consequences. It seems possible to have car-free Sundays and government rationed fuel, as is known from the seventies. Another third oil crisis seems within reach. One of the reasons for this development is the difficult relation between the United States of America (U.S.) as well as the European Union with Iran. The fuel for the cars of the developed countries has to take the dangerous route via "The Strait of Hormuz". If Iran blocks this strategic route between the Gulf of Oman and the Persian Gulf a violent conflict in the Gulf Region seems possible. Another reason for the oil price development is the dependence of the developed countries on oil of the OPEC cartel. The OPEC promotes almost 40% of the crude oil production in the world and holds more 70% of proven reserves. This is more oil than all other countries in the world produce. Therefore, it seems evident that OPEC has a certain market and pricing power.