This chapter will contain certain elements of global trade and discuss how it has affected, is affecting, and will affect our global economy. We are going to focus specifically on the concept of oil trade. Throughout this project, we plan to discuss a variety of ideas. Among these ideas are concepts such as resource location and destination. Another aspect we will be mastering will be the effect of importing oil from foreign countries instead of utilizing the oil from United States wells and reserves.

Along with discussing oil as an important energy resource, we would also like to attempt to investigate the alternative resources America possesses. We will discuss why these resources are so important to the United States and why we rely on foreign countries to provide us with them. Furthermore, our group will discuss the reason Americans can not provide for themselves and use their own products.

Questions for Research:

  1. What are the pros and cons of exporting and importing?
  2. Why is global oil trade important to the U.S?
  3. What can't America use their own resources?
  4. What resources does America have other than oil?
  5. When did trade patterns become important to the global economy today
  6. How does an economy begin?
  7. What are the prices of gasoline like in other countries?

History of Oil Wells:

One of the first oil wells was discovered in China around the time of 350 A.D. When it was discovered, the people of China drilled
800 feet into the Earth's surface. They utilized bamboo poles to scrape out the oil. From this time to now, the need for oil has
obviously increased dramatically. In today's economy, oil prices are soaring, but what we want to know is, why? Why the dramatic
rise and fall of the cost of this precious fuel?


Regional Importers and Exporters:

The three largest consuming regions of oil in the world are: North America, Europe, and Asia-Pacific. These regions are all importers, while all other regions are exporters. The Middle East vastly exports more oil than and other region in the world, making the importance oil.jpgof global dependency on the region gladly comprehensible. Even though the United States is the largest individual importer, North America as a whole, ranks third in the world. The reason is because Mexico and Canada are two of the three United States’ top oil suppliers. Fortunately, while America consumes more natural gas than it produces, almost all of our gas imports come from Canada. T he United States itself is a net exporter of natural gas to Mexico. The largest factor influencing how much natural gas Canada can export is how much more they will need to raise oil production. However, right here at home we have plenty of gas to keep us busy. The only problem that we face is that half of the oil that could be provided to us from our own states is off limits. The factor that declines us to do so is that most of those regions are under sever restrictions because they lie in the on the eastern Gulf of Mexico. In the near future we are going to need more oil and gas for many years to come, therefore; we need to find a way to retrieve this resource.

Oil Trade:

There is more trade internationally in oil than in anything else. All measures are important and for different reasons. Volume offers insights about whether markets are over-or under-supplied and whether the transportation is sufficient enough to provide the essential flow. Value permits the government and economists to evaluate the patterns of international trade and the balance of trade and payments. Carrying capacity allows the shipping industry to review how many tankers are necessary and on what routes. Transportation and storage play a significant role here. They are notoil_trae.jpeg just a connection between the importers and exporters; their related costs are a major factor in establishing the pattern of world trade.

Since we are all American's, we usually focus on our own economy. One of the main focuses in our society is the fluctuating price of gasoline. Our country; however, is not the only industrialized country that suffers from high fuel costs. In fact,America has only a 15% tax on gasoline. In other countries, such as the Netherlands, gas prices reach up to nearly seven dollars per gallon. Most of the money(about 158 percent of it) is in taxes (around 4 dollars). China, one of the powerhouse economies in the global economy, pays less than 2 dollars per gallon. The lowest price per gallon, perhaps, is in the country that produces the most oil, Iraq. In Iraq, their fuel may cost as low as 10 cents per gallon!

Our Future:

Since our project is dealing with the past, present, and future of global oil trade, we'd like to investigate it more. We have already discussed the past, and we all know how oil trade is affecting us now. It is time to talk about what's most important, the future. Have you ever wandered when the extraction of this precious fossil fuel would reach it's peak? Experts are saying it's going to happen. The term for this occurrence is "peak oil".When we reach this, the production of petroleum oil will decline. This dramatic decline will impact the oil- dependent nations, like the US, tremendously. By not being able to afford the cost per gallon, many Americans will be forced to move out of suburban homes to already overpopulated cities such as New York.

The Egasprices.jpgffects of High Oil Prices on the Economy:

Oil prices remain an important factor on the global economy. An oil-price increase leads to a transfer of income from importing to exporting countries through terms of trade. The effect of the price depends on various issues, such as the share of the cost oil in national income, the dependence on imported oil, and the ability of users to reduce their consumption. A price increase directly increases national income, but can be thrown off by a lower demand for exports or imports due to a recession like today. High prices lead to inflation, increased input costs, reduced demand for oil, and lower investment in foreign country exporters. An oil price increase also affects the balance of trade between countries. As a result imports become less expensive and less valuable. All of these problems impact the overall economy over the long term. It is affecting us today like it has in the past. Eventually our economy will suffer more from the rise in oil prices; in the near future we will be unable to afford gas and will have to resort to alternative resources that provide us with the same use.

Fuel Costs:

Fuel costs are affected by the rate at which buyers consume fuel products. The fuel industry creates jobs and overall accounts for a wealthier and improved economy. When there is a large demand for oil products and a shortage in supply; however, the economy can be negatively affected. When oil prices are unstable consumers tend to stop purchasing other products to save money to spend on fuel. This raises the unemployment rate in other American industries,thus causing a recession.

Fossil Fuels:

Fossil Fuels are an excellent source of energy. It helps to transport our goods and it is also major source of electrical energy all across the world. Coal plants account for at least 60% of our national energy and 52% of the world's demand. All together, we burn about 1.9 million tons of coal a year to generate electricity across the world. Also another fossil fuel that provides us with energy is natural gas it accounts for about 24% of the energy in the United States. As of right now it is estimated that within the next fifty years we will eventually run out of our most important fossil fuels, coal and petroleum, and that will be a crucial time in our economy.