Impact of looming oil crisis on global trade

Impact of looming inunct crisis on global trade The availability of OLL Is taken for granted every twenty-four hours by short letteres, governments and individuals alike. However, an rock oil crisis Is looming and could feasibly hit at any point. This brings back memories of the oil shortages during the asses, which had a major impact on the economic growth, particularly In major Industrial countries such as united States. During the 1973 oil crisis an ban initiated by the Organization of PetroleumExporting Countries (OPEC) to protest against some of the American trade practices. As a result of this embargo, the price of oil outgrowthd by ccc%, causing widespread oil shortages and in some cases forcing petrol post to close. Experts wealthy person warned that similar crisis may be Imminent, with Western countries presence In the middle east causing friction with some of the countries who are members of OPEC. 011 prices have been Increased In many areas in an attempt to reduce inlet levels and protect our natural resources.However, research has indicated that despite these measures the consumption of 011 continues to Increase, with an estimated 89 meg barrels of oil being used globally every day. Should a crisis like this hit, the found on the global economy leave behind be huge importing materials and goods has become an essential practice for larger organizations, exclusively any increase in oil price would dramatically increase the transportation costs of importing and exporting.As a result, companies would need to either look for cheaper alternatives, or to a greater extent likely raise the cost of their end product, something which will slow the growth of the economy and prolong the recession. Travel has become a major source of expenditure for large firms, with employees often flying to business meetings Internationally as well as domestically. Budget shiplines turnover has bighearted throughout the recession as a result of the increase in business give way, however any increase in the cost of oil would force these airlines to pass the costs onto their customers in the form of increased air fares.In the event of another oil crisis, businesses which currently have large travel expenses would explosively find themselves with vastly increased overheads, and have a sudden need to explore cheaper alternatives which may not suit their business plan. imparting is by far the biggest cause of oil consumption, with this sector estimated to account for more than half of all consumption worldwide, and more than two thirds of consumption within the US.As well as Increased transportation costs, the costs of operating machinery would to a fault Increase during an OLL crisis, leading to Increases In the cost of many essential items, including foodstuffs. As with the rising cost of transportation, any increase in Experts are faint when another oil crisis might hit, but most experts agree that a crisis of some sort is likely to o ccur soon. While the exact effect it will have on the world economy cant be accurately predicted, there is no doubt that businesses of all sizes will need to lodge very quickly to continue trading.