OIL IN WORLD ECONOMY

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OIL IN WORLD ECONOMY

• Martin GRE
• ITP-22, CIEFL
• 2006

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Content

• Introduction
• Oil History
• Ancient Modern Times
• Industry
• 7 Sisters
• OPEC
• General Characteristics
• Position in World Economy
• Oil Shocks Oil Prices
• Future of Oil
• Oil Depletion
• Peak Oil Hubbert Curve
• Oil Scenarios
• Conclusion

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Introduction
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Oil History Ancient Times

• Babylon cementing walls
• China (4th century) brine evaporation to
  produce salt
• Persia medicinal lighting usage
• Baghdad (8th century) streets paved with tar
• Baku (9th century) production of naphtha

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Oil History Modern Times

• Process of distillation
• 1848
• Baku
• 1859
• Edwin Drake Titusville, Pennsylvania, USA

• 1853
• Vodka
• Ignacy Lukasiewicz
• First oil lamp
• Kerosene
• Public lighting using kerosene lamps

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Oil History - Industry

• Standard Oil Company (1870)
• Sherman Antitrust Act (1890)
• US Supreme Court Rule (1911)
• 7 Sisters

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Oil History 7 Sisters
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Oil History 7 Sisters Dance
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OPEC General Characteristics

• Foundation
• Principal Aims
• Membership
• Structure

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OPEC Position in World Economy

• 1960s
• Fostering its role
• 1970s
• Role in oil shocks
• 1980s
• Production quotas
• OPEC Basket

• 1990s
• Oil for Food Program
• Asian economic crisis
• 21st century
• Price band
• New OPEC Basket

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Oil Shocks

• Definition any unexpected and substantial
  change in crude oil supplies and prices
• 1st shock 1973 Yom Kippur War
• 2nd shock 1978-79 Iran-Iraq Conflict
• 3rd shock (anti-shock) 1986
• 4th shock 1990-91 Iraq-Kuwait Conflict
• 5th shock (anti-shock) 1999
• 6th shock price increases after 2000 ???

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Oil Shocks
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Oil Shocks - Effects

• Significant changes in world economy
• Scientific technological revolution progress
• Development of new sectors in national economies
  with low energy consumption
• The beginning of information revolution

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Oil Prices
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Future of Oil Oil Depletion
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Future of Oil Oil Depletion

• Peak Oil
• the point in time when global production of
  crude oil reaches in pinnacle and then enters
  into a permanent decline
• Hubbert Curve

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Future of Oil Oil Depletion
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Future of Oil Oil Depletion

• The most common consequences of peak oil
• Our modern economy depends on cheap oil
• Plastics depend on cheap oil
• Food depends on cheap oil
• Peace might depend on cheap oil
• Our whole civilization might depend on cheap oil

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Future of Oil Oil Scenarios

• Pollyanna Scenario
• Optimistic Scenario
• Plateau Scenario
• Pessimistic Scenario
• Head for the Hills Scenario

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Conclusion

• Oil as an energy source
• Origin of oil
• OPEC vs. NOPEC
• Effects of oil prices
• ??? END OF OIL ???

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