Instability of trade in petroleum and petroleum products

Instability of petroleum prices
Oil price fluctuations

Nature

The instability of trade in petroleum and petroleum products refers to the fluctuations in supply, demand, and prices that can disrupt global markets. Factors contributing to this instability include geopolitical tensions, natural disasters, regulatory changes, and shifts in consumer behavior. Such volatility can lead to economic uncertainty, affecting both producing and consuming nations. It poses challenges for energy security, investment planning, and environmental sustainability. Additionally, price spikes can impact inflation and economic growth, while prolonged low prices can threaten the viability of oil-dependent economies and industries, creating a complex web of interrelated economic and social issues.

Incidence

Until 1970, the world oil prices never rose higher than US$ 2 a barrel, although oil products were sold at prices several hundred percent above cost. In the 1970s and 1980s, OPEC countries raised the per barrel reference prices from less than US$ 2.00 to $34.00. Since 1979, OPEC's market share has dropped from 63 to 38% of world oil sales. Oil production has grown enormously in China, Latin America and Northern Europe while it has halved in the Middle East. The role of the Arab oil-producing countries and the importance of the Straits of Hormuz to the world economy has dramatically declined not only because of the Iran-Iraq war, but also because of the rapid development of non-petroleum-based sources of energy. The present oil glut has caused production or price roll backs in OPEC and in non-OPEC producers such as the former Soviet Union, Norway and the UK. Oil prices may stabilize around $20-25 a barrel in the 1990s.

Claim

The instability of trade in petroleum and petroleum products is a critical global issue that threatens economic stability, national security, and environmental sustainability. Fluctuating prices and supply disruptions not only burden consumers and businesses but also exacerbate geopolitical tensions. As nations grapple with energy transitions, reliance on volatile fossil fuel markets undermines progress toward sustainable alternatives. Immediate action is essential to stabilize this sector, ensuring a secure energy future and fostering global cooperation for a sustainable planet.

Counter-claim

The instability of trade in petroleum and petroleum products is often overstated. In a world increasingly focused on renewable energy, the volatility of oil markets is becoming less relevant. Countries are diversifying their energy sources, reducing dependency on fossil fuels. Moreover, technological advancements in energy efficiency and alternative fuels are rendering traditional petroleum trade less critical. Thus, the perceived instability is merely a transient issue, overshadowed by the broader shift towards sustainable energy solutions.