Energy and the economy

Energy and the economy

The energy is such a necessity in the modern life and generates our civilization to move forward. Therefore, people usually tight the energy price with the expected future economic performance. This is very reasonable; however, I think it has been overdone.

The world crude oil price has a close relationship with the economic expected growth. Usually they are interacted, as the oil price generally moves in a similar direct with the world economic growth, and the oil shocks could lead to the economic shock in world wide. Crude oil is a key raw material in modern manufacturing and a key energy supply as well. It has a very key feature that allows itself to beat other types of energy, its efficiency. It is more efficiency than coal, or charcoal. Nuclear power may be more efficient than petrol, the unsafety of nuclear power has been feared by the most of the society. Such features give crude oil its unique position in the energy field and the oil industry dominates all other energy industries.

However, crude oil has not been very generous to our humans that it has very strong geographical bias. Some areas have very rich crude oil resources; but some do not. Therefore, crude oil is not supplied to meet the necessary need but for profits. Nothing is really made to meet the need. However, crude oil is a relatively more extreme and crucial case. It has already become something that is required by almost all parts of the society that all parties compete with each other in order to have more consumption of it. When no party is willing to give up its demand, the supply becomes very powerful especially the supply side is very limited and controlled by much fewer parties. Therefore, the demander in the oil market is basically the general economy but the supply is very restricted and limited.

Both the demand and supply of the oil market could be manipulated and are very likely to be influenced by the global political environment. Thus the market becomes extremely complicated that more parties involves, more uncertainty will be raised.