International Oil Security: Problems and Policies Essay

Energy hostage was a priority of the Bush judgeship in 2001. In a larger context, world-wide petroleum trade protection is a major concern of the world, the United States in particular. Oil protection is not about depleting reserves and having continuous supply to cover demand, hardly the real issue is the vegetable oil costs. International Oil Security involves twain things (1) oil producers control the supply and damage of the commodity, and (2) volatile oil price creates have disruptive effects on macroeconomic situations. In the mid-seventies the downtrend and the inflation of industrialized economies were the results of oil price shocks.These price shocks were mostly caused by unanticipated and drastic changes in supply, demand, and inventory which were all destabilizing. Since the late mid-nineties OPEC controls the global oil marketplace because it owns 45% of oil reserves and its global output share could double in the next decade. The oil market is a volatile one . When supplies are low, prices go up to meet the demand. A shock comes when there is big shift in the supply that forward prices soaring. Such big swings may bring disastrous effects on the macroeconomic equation. The oil businessmen may cushion their financial risks without considering the oil-intensive region of the economy. The case of the US shows that(1) effects on the US depends on its outlay of oil and not on its importation of oil, (2) it would be more pricey to increase its own supply and reduce its consumption, and (3) its military presence in the Middle East has nothing to do with oil imports. The Bush brasss thrust is to increase domestic oil production and diminish its reliance on oil imports, develop more efficient free dynamism utilization and seek alternative and renewable energy resources. Legislations providing tax breaks and converting ANWR for oil exploration and production were passed.Still, increasing output will reduce the order of magnitude of oil sh ocks slightly by keeping the prices down and decreasing the aggravated effects of oil on the economy. ANWR appears to be a bad idea, in the beginning because of the social and environmental impact it carries. From a macroeconomic view, decreasing the oil intensity of its economy is paramount to ensuring its energy security. Cost-effective conservation measures and correct minimal adjustments have insignificant effect on petroleum prices. It would swallow stronger policies to complement conservation and efficient utilization to boost its oil security efforts(1) better management of oil reserves, (2) protection for the low-income sector who is most comminuted to price swings, (3) exploring other alternative fuel sources, (4) providing for energy use that labor the tide of price changes, and (5) developing non-fossil based fuels. In the final count, energy security can be had depending on the high costs of oil and the critical research and development needed.