Oil is one of the most demanded products because it is the main source of energy or fuel is most sectors of most economies in the world. The transport, manufacturing, and many other economic sectors heavily depend on oil as the source of energy. Currently, the demand for oil in the world is so high that oil producing countries earn large amounts of foreign revenue just by exporting oil. The world oil prices have been on the rise since the turn of the century. This is attributed to the recent political instability, war and uprisings in the major oil producing nations such as Syria, Iran, Libya, Saudi Arabia and Iraq. The amount of oil deposits in the world is said to be enough to meet the world demand for oil for many more decades. The problem however, is that oil production and supply depends on many other factors. Israel, for instance, has no oil deposits hence; it has to import from abroad. The major oil producing nations are the Arab nations which have a very poor relationship with Israel since its establishment in 1948. This makes Israel a vulnerable nation because it has no energy of its own. Russia on the other hand, has its strength established on the basis of its energy and fuel reserve which it produces internally. This shows that oil is a very important commodity that can determine the strength of a country’s economy.
Oil derives so much utility for every economy or individual. For those oil producing countries, oil is a major foreign exchange earner. In fact, the main export of Iran, Iraq and Saudi Arabia is oil which pumps millions of foreign currency into their economies. Oil is essential in ensuring that the machinery and the transport sector in a country are well run. Developed countries like Israel that do not have their own oil deposits have to import it to meet the high demand. They use a lot of oil in their military, transport, agriculture and other economic sectors. This has made oil so important that Israel is considering exploiting the huge deposits of shale in the country into oil to meet its own demand for oil. The Israelis expect to improve their foreign policy as well using the oil by trading with the European nations.
The demand for oil and oil products has changed since the turn of the century because of various factors. These changes in demand for oil in countries such as Israel can be attributed to increased economic activities. In Israel, for example, the economic activities increase each year. This is because as population increases, the demand for oil in every sector of the economy increases too. Furthermore, the dynamic world has led to increased demand for oil. In the developed nations such as Israel, the national security is of great importance. That is why the nation invests so much in the military for defense. The military uses vehicles, aero planes and generally their needs significantly increase the demand for oil.
The increase in industrial activities has also led to increased demand for oil. With the population increase, industries have increased in number and are now operating in larger scales than before. These industries demand oil and other forms of energy in order to operate. Families are also using a lot of oil product fuel for transport and for cooking purposes. The demand has become very high and necessary hence making Israel to start contemplating the process of converting its shale deposits into oil so as to satisfy its demand.
The oil market as well as equilibrium prices have also changed even with the oil supply remaining the same. This can be attributed to the simple law of demand where as the demand for oil has risen over the past, the prices have increased. There is few oil producing nations in the world. While the industrial and technological progress in the world has improved, the rest of the world continues to demand more oil. The oil market has also been changing because of other factors such as the relationship between oil producing countries and the oil demanding nations. The tense relationship between Israel and Arab countries has resulted in Israel having to demand less oil from the Arab countries. There are other factors such as international economic sanctions. An example is Iran, Iran is a major oil producing nation, but since its attempt to make nuclear energy, it has been sanctioned by western countries. This implies that oil from Iran is not demanded as when it was before. The oil market will be affected by rising demand because some countries will not be demanding oil from Iran. These factors shift the oil market equilibrium as well as increasing oil demand.
The oil market supply has also changed over time. The supply in the oil market is regulated by an association called OPEC. OPEC is the umbrella union of oil producing nations which helps in setting prices and determining the amount of oil to supply at any given point. This regulates the amount of oil supplied by these countries. The equilibrium prices of oil have been changing very often. The OPEC has been setting relatively high prices of crude oil per barrel because of the prevailing conditions in the world economy.
The world economic depression in 2008 caused the oil prices to shoot up hence the supply of oil was affected. The recent political upheavals in the Arab nations such as Syria where there has been political unrest hence affecting the oil production process. The gulf war also affected the supply of oil since countries like Iran and Iraq were not producing their maximum level during that time. With the regulations by OPEC, the amount of oil supplied at any given time is predetermined. Therefore, the supply of oil is determined by the OPEC rules, international affairs and individual oil producing countries. The changes in oil supply create a shift in equilibrium in the market and also cause increase in oil prices.
The demand for oil is inelastic to price changes. Oil is a necessity product because it is a main source of energy in important sectors of every country’s economy. Therefore, even if prices are increased, the demand for oil will remain the same. Consumers will continue purchasing oil at the new price levels. When the world oil prices soared high in 2010, the demand for oil in the world was not affected; proof that demand for oil is price inelastic.
Spilsbury, R., & Spilsbury, L. (2011). The Oil Industry. New York: The Rosen Publishing Group.
The law plays a significant role in the commercial status and operations in the United States. The law is used to ensure that business in the country, between states, and in states is run smoothly without infringing on the rights of any other party. The laws on commercial issues in the country are passed by the congress. The Supreme Court, which handles those commercial and other business cases, bases its judgment on the laws passed by the congress. The congress has power to pass commercial clauses, which means the congress has a mandate to control commercial activities among different states. Even though the Supreme Court is has mandate to alter the decisions of congress, the congress still passes important regulator laws in the commercial affairs. The laws are very important because they have major functions and roles in the American economy. The laws mostly regulate and control every product and person associated with the flow of interstate business and commerce. These laws are applied in three major ways.
The laws are used to control intrastate versus interstate business and commercial activities. The United States congress is constitutionally empowered to carry out the regulatory duty in three ways. First, the law can regulate intrastate versus interstate affairs by controlling the instrumentalities across several states, for instance, shipping vehicles. Secondly, the law regulates commercial channels between different states like highways and railways. Lastly, the law provides articles of movement in commercial activities between different states. For some of the entirely intrastate commercial activities, the law can have control over them as long as they are deemed to have a significant economic impact on interstate business and commerce. For instance, if a company that operates in only one state, that is intrastate commerce, has branches such as marketing offices in other states, its activities will be said to affect economic activities beyond the state, hence they will be treated by law as interstate. The law helps ensure that the commercial activities that are carried out within a state do not interfere with those business and commercial activities between different states and hence the economy of the United States. An example of such a law is the Whistle Blower Act which forbids any individual or firm that takes part in interstate business from terminating jobs for employees who report safety violations.
However, the law of the Whistleblower does not apply to economic, commercial or business activities that are limited to within one state. For instance, when the government sued the Steel Co, which is a company based in West Virginia, for unconstitutionally sacking employees because they reported safety violation by the firm. In court, the court of law would consider Steel Co. a company whose commercial activities are interstate if it has any such as warehouses, advertising, shipping, warehouses and importing that are based outside West Virginia.
More so, the Supreme Court also does adhere to laws that regulate interstate and intrastate commercial activities when dealing with cases involving noncommercial activities that are in one state. For example, cases of criminalizing marijuana possession even when it is not cultivated on noncommercial basis or consumed for medical purposes in a particular state.
The other function of the law in commercial and business activities is to protect civilian rights. Federal laws are very important in regulating federal commerce. The congress in the 1960s passed crucial laws that paved way for fair and just environments for all civilians in the United States. The law passed in 1964 under the Civil Rights Act is always referred to by the Supreme Court when making decisions on commercial activities affecting civilians from all walks of life. This law prohibits discrimination of civilians from accessing business and commercial entities and services such as accommodation in hotels and restaurants based race, gender, origin or any other form of discrimination. An example of a case where the civil rights law was used to protect civilians was in the case of Motel versus United States, the court made it clear that under the civil rights act, racial discrimination was illegal and that every individual had the right to come into the facility regardless of their gender or race. The civil rights act came into force at a time when the fight for civilian rights and equality was at its peak. The then president Johnson signed the civilian rights act in the presence of famous civil right activist, Martin Luther King Jnr. The civil rights act helped protect the rights of people of different race and also protected travelers. It is said that earlier, travelers feared to travel since they feared discrimination in accommodation facilities.
The laws also play a significant role by regulating noncommercial activities. The laws passed in the congress that involve noncommercial activities still apply. This was proven back in 1995 when the American Supreme Court made decisions based on these laws. The laws that are of noncommercial activities such as criminal laws are used by the Supreme Court too. However, the courts must establish whether there is at least some relationship between the noncommercial activities with economic or commercial impacts. Those laws that were passed and are found to have no link to the commercial activities in the country are usually not considered and are therefore invalidated, for instance, in a case between the United States versus Lopez, a federal statute was invalidated because it had no relationship with commercial powers.
Therefore, the laws that regulate and control the commercial sector in the country are passed by the congress to enhance economic harmony within and between states. However, if the laws passed do not have a significant link to commercial activities, the courts of law will dismiss them on the basis that they are beyond commercial powers. Commercial powers laws are also regarded to be superior to state regulatory laws which govern commercial activities.
In the transport industry, the laws that govern the industry are clearly stated. The high ways, rail ways, air ports and harbors are federal property. The states have no control over these infrastructures since the congressional powers state that the facilities affect interstate economies significantly. Therefore, these facilities are under the control of the federal government. The state authorities are responsible for repairs and maintenance of the infrastructure because it earns them revenue too. But they are for use by every American citizen regardless of race, or state of origin.
References
Carroll, A. B., & Buchholtz, A. K. (2011). Business & Society: Ethics, Sustainability, and Stakeholder Management (8 ed.). London: Cengage Learning.
