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Petroleum and Politics. The report aims to analyse the evolution of oil over the last five decades focusing on the oil exporting countries and evaluating the importance of oil to reduce poverty and promote development. It also examines the confrontation

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Introduction

Background paper: Petroleum & Politics Executive summary The report aims to analyse the evolution of oil over the last five decades focusing on the oil exporting countries and evaluating the importance of oil to reduce poverty and promote development. It also examines the confrontation that will take place between the two largest oil consumers (China and US) as the oil production will become insufficient to satisfy the growing demand. The findings reveal how different conflicts among oil producer countries have decreased the efficiency of the OPEC to control the prices and apply correct oil policies. It is very probable that in the next years the price of oil will grow to levels that the world has not seen in its history because the limited oil reserves can not satisfy the increasing demand. The policies applied by Venezuela in the last decade have contributed to promote development and reduce poverty among its population significantly. On the other hand countries like Nigeria have not had the chance to applied correct policies due to the political instability and diseases such as HIV or AIDS. Iran is one of the better positioned countries to achieve the MDGS by 2015. However the country faces high levels of inequality and high rates of inflation and unemployment. As China's demand for oil increases the competence with US to control the oil supplies rises. Oil exporting countries prefer to make oil deals with China rather than the US because of the guarantee of not interfere on the politics of the selling countries. To avoid the confrontation it will be necessary to intensify international politics and strategic alliances in order to avoid protectionism and explore new sources of energy to reduce the dependence on oil. The carbon dioxide emissions produced by the consumption of oil are contributing significantly to increase global warming, the use of alternatives such as bio-fuels brings new challenges as they compete with food and increase its price. Table of contents: Executive summary i Table of contents ii 1. ...read more.

Middle

Since Hugo Chavez assumed the presidency of Venezuela in 1999 the country has significantly reduced poverty levels. Weisbrot (2008) estimated the rate of poverty in Venezuela in 1999 in 50% and the rate of extreme poverty in 19.9%. Eight years later in 2007 the poverty rate was reduced to 33.1% while extreme poverty fell to 9.1%. In addition Weisbrot (2008) stated that 'access to health care and education has been greatly expanded.' Despite that the policies used by the Chavez Administration, which included expropriations and constant verbal attacks to the US, have been criticised by western countries no one can argue that Venezuela's economy has become stronger and poverty has been reduced. According to the IMF the GDP of Venezuela has grown an average of 15.18% over the last decade, the highest growth in Latin America, and the income per capita has increased from US$4.132, 33 in 1999 to US$11.288, 33 in 2008. In addition Weisbrot, Ray and Sandoval (2009) espouse that the gini coefficient has fallen from 48.1% in 1999 to 41% in 2008 which shows that inequality has been also reduced significantly. Today Venezuela represents a good example of a country that can promote development with the benefits of oil. The country will have to demonstrate if it is able to maintain in the future the development achieved over the last decade. 3.2 Nigeria With a population estimated in 149 millions (CIA Factbook, 2009) Nigeria has the largest population in Africa. As Marinho (n.d.) explains since Nigeria obtained its independence of Great Britain in 1960 the country has experienced a dramatic period of civil wars and military interventions that has extended until 1999. Today the political instability is still very high, in part due to the confrontation between its population which is half Muslim and half Christian. The political instability and high levels of corruption have made it very difficult for the successive Governments to apply correct policies. ...read more.

Conclusion

5. Oil & environment According to the EIA (2009) the main damage caused to the environment by oil is the carbon dioxide emissions emitted by cars and planes which contribute to accelerate global warming. To decrease the emissions cars companies are being required to produce more environmental friendly vehicles able to consume less gasoline. In addition new fuels like bio-diesel are becoming popular. However the production of bio-fuels brings new challenges as it competes directly with the production of food increasing its price. Another serious problem is the oil spilled into the Ocean which harms wildlife. The most efficient way to transport oil is by sea and to minimise risks is convenient that oil boats are checked regularly. In addition drilling in the oceans to extract oil produces water pollution and may disturb land and ocean habitats. 6. Conclusion The successive conflicts among the oil exporting countries have reduced the ability of the OPEC to control the pricing policies on oil. It is very probable that in the future the prices of oil will grow to levels never seen before due to the increasing demand which is growing faster than the supply. While some oil exporting countries like Venezuela or Iran have applied correct policies to promote development and reduce poverty with the benefits of their oil exports other countries like Nigeria have not been able to do so due to the political instability and low levels of education and healthcare conditions. The fact that the demand of oil will increase dramatically in the future and the production capacity is limited makes very possible a future confrontation between the two largest oil consumers: China and US. To avoid the confrontation it will be necessary to intensify international politics and strategic alliances in order to avoid protectionism and explore new sources of energy to reduce the dependence on oil. The carbon dioxide emissions produced by the consumption of oil are contributing significantly to increase global warming, the use of alternatives such as bio-fuels brings new challenges as they compete with food and increase its price. ...read more.

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