Technological innovations have had various effects on the prices of oil all over the world. Many countries have been affected either positively or negatively by the advancement in technology, especially in the oil business. There has been a drop in the prices of oil due to various reasons. Many countries which produce oil, especially the Gulf States and the general Fly Emirate members have had a terrible economic situation due to the drop in prices of the oil prices, which acts to be the primary source of income for them.
The advancements in technology are expected to bring an increase in various fields of energy production. These innovations include the light-emitting diodes (LEDs), changes of the electric vehicles, the avant-grade gas production procedures which are bound to not only increase the production of energy and improve the way people live but also improve the economic situation of many individuals and states. The continuous development of technology, however, has a mixed effect, both positive and negative to the many oil producing countries (Rogers, p1).
With the advancements made in the technological world, it became easier to produce oil, which increased the supply in the market, making the demand to fall. With the fall of the request, there was no other option other than to drop the prices, so as to dispose of the extra produce (Krauss, par 3). The technological innovation in the American soil, which made the discovery of oil in America, making the Americas oil production to double in a period of fewer than seven years is an important issue. With the increase in the manufacture of oil by Americans, there was the excess supply of oil in the world. The increase forced other major oil-producing countries such as Nigeria, Saudi Arabia and the Middle East countries to look for oil customers in the Asian continent and other parts of the world (Mohamad, par 3).
The drop in the oil prices has been a devastating time and a situation that sends a lot of fear to the Arabian, and the United Emirates counties. The countries have been affected by the continuous drop in the market price of the oil products, which has made such countries consider diversifying their economic activities so as to cater for other needs in the countries. The states have chosen to expand their economic activities, forcing the leaders of Saudi Arabia and the Oman state to call for quick transformation that would ensure that there is another source of income for the countries.
Advancements in technology had two effects on the Saudi Arabian State. The first effects were that an exploration of the oil mines and deposits went too deep, even to the desert, and the gulf sea, hence increasing the production of oil. The increases in the oil production led to the excess supply of oil in the market, which made Saudi government build more oil wells and intensify their research in the oil fields. The application of technology in the fields, however, led to competition among the various countries which produce oil, and later the prices of oil dropping.
The fall in the oil prices had a lot of adverse effects of the Saudi Arabian state that the king had to announce subsidies for various commodities, due to the high cost of living. Life and administration became a challenge that the government tried to look for other means of sustaining its high budgets for the weapon production, support the Islam militia as well as continuing its war with Yemen and other terrorist groups around the area (Rogers, pp. 2-5).
The development in technological innovation has however had a positive effect on the American economy. The continuous expansion of technology in the world of research has had various benefits in the US. Although the prices of oil have dropped, the effects are not that much of the US state. The USA has been able to obtain energy from other sources such as the renewable sources. However, USA is also abundant in the fossil fuels such as natural gas, coal, and petroleum. The fact that the USA is a state with many economic activities, and whose dependence is not on oil as the primary source of energy, the drop in the oil prices did not have many effects on its economic state as it did to the Saudi Arabian state (Godman, par 3).
Many businesses run into the oil production business because they have a better chance of survival and earning profits than their competitors. The new technologies that have come in place aim at exploiting the sources of the energy, which is the oil deposits, without because other countries or even businesses are also expanding their activities. The various components of the oil exploration and extraction procedures employed cost a lot of money, which at the end makes it hard for any companies or country which uses the expensive technologies to extract the oil, earn the least profits (Vanderbruck, par 4).
The development of the technologies and the advancements in the energy sector is a major step which countries make so as to earn their political feasibility as well as the economic development. The development of the energy sector has been of great importance to the world of business based on the fact that oil prices keep dropping the day in day out. Many countries have had a lot of efforts put on the various energy sectors, so as to transform and also enhance economic stability, environmental as well as the political viability. The different technological advancements are put in place so as to enable the policy makers, and the investors consider doing business with the set countries (Cheon, pp. 407–417).
The greatest innovations in the technology which have led to the increase in the supply of the oil in many countries, hence making the Gulf States change their policies, to making their economies better through various ways. The Gulf States resorted to the imposition of subsidy strategies, which resulted in the rise of their fuel prices and the use of their gold reserves as a way of creating their wealth.
The economic situation didn’t get any better, though, through the application of the strategies. The states should, however, have policies that cut down in the government expenditure, through the application of the contractionary monetary policies, such as cutting down the expenses on the costly and the expensive projects, such as the costly airport, whose economic importance is doomed. The states can also employ helpful strategies and tactics to enhance their financial situation, such as the imposition of fair taxation systems and policies, the application of laws to cut down on expensive private expenditures and the enhancement of human working conditions.
There are various countries which have been able to benefit from the technological innovations, which later led to the drop sin the prices of the oil prices. However, the fuel users are the ones who benefit most and make a lot of saving from the lowered oil prices. Many countries have, however, been able to suffer a lot from the oil price drops. Countries such as Nigeria, Venezuela, Ecuador, Brazil, and Russia are some of the many countries which are suffering from the fall in the oil prices.
The countries suffering the losses made in the oil business have resulted in various constructive economic activities such as the Chevron, Royal Dutch Shell and BP companies have announced the drastic drop in the cutoff employees so as to manage their payrolls and the oil businesses due to the reduction in the firm. Oklahoma, Louisiana, Alaska, North Dakota, and Texas are some of the countries struggling with their financial challenges to cope up with the situation.
The effects of the drop of gas have not only been a problem with the government’s economic and political conditions because it has also been an issue that has escalated to the social factors. Many people have suffered terribly from the accidents since many people can travel without using a lot of money on the gas and other oil related products. Many people have also lost their jobs and are now suffering because they cannot feed their families, they cannot get any source of money for their upkeep, and they cannot be able to generate any form of income to their governments.
However, there has been a relief to the oil non-producing countries who mostly depend on oil products for the economic stability. Most of the countries which import the oil related products, either in the finished or the raw form has benefited a lot because they can only use low amounts of money to import the products which they used to buy using a lot of money. However, the increase of oil products imported due to the drop in the oil prices has seen production increase in those countries which import the oil. The increase in the manufacture has also led to the fall in prices of their commodities, which also results in small profits, and some of the businesses even go bankrupt and close down the businesses (Perry, par 3).
In conclusion, the advancement of technology has had both positive and adverse effects on the many countries of the world. The improvements in the oil production have led to the high oil production, increasing supply, lowering demand and eventually a drop in the oil prices. For those oil non-producing countries, the decrease in oil prices acts as a means of wealth.
Work Cited
Cheon, Andrew, and Urpelainen, Johannes, “Oil prices and energy technology innovation: An empirical analysis”, Global Environmental Change, Vol. 22, no. 2, pp. 407–417
Godman, Jennifer, “WHY AMERICA SHOULD STOP FRACKING”, Penn Political Review, November 10, 2014 (http://pennpoliticalreview.org/archives/6615)
Krauss, Clifford, “Oil Prices: What’s Behind the Drop? Simple Economics, The New York Times, April 28, 2016 (http://www.nytimes.com/interactive/2016/business/energy-environment/oil-prices.html?_r=0)
Mohamad, Ibrahim, “Low Oil Prices Force Rethink On Reforms In Gulf States”, Deutsche Welle, 04. Nov. 2015 (http://www.dw.com/en/low-oil-prices-force-rethink-on-reforms-in-gulf-states/a-18825704)
Perry, Mary, “Energy fact of the day: US oil production surged last week to the highest level since July 1988, more than 25 years ago”, January 15, 2014 (http://www.aei.org/publication/energy-fact-of-the-day-us-oil-production-surged-last-week-to-the-highest-level-since-july-1988-more-than-25-years-ago/)
Rogers, Matt, “Energy = innovation: 10 disruptive technologies” (http://www.ledesigngroup.com/wp-content/uploads/migrated/SRP_02_Innovation.pdf)
Vanderbruck, Tobias, “Current Oil Prices Create Opportunities”, oil-price.net (http://www.oil-price.net/en/articles/current-oil-prices-create-opportunities.php)
