oil as power powering the world’s economy 1. check for understanding 2 why is oil so important to...
TRANSCRIPT
Check for Understanding
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Why is oil so important to modern life?
Which nations have the most oil? Oil to export?
What are the political, military, and economic consequences of securing reliable sources of oil?
Are the benefits of crude oil worth the costs?
Breaking down a Barrel of Crude Oil
Fun Fact No. 1:
There are 42 gallons of crude oil in one barrel!
Fun Fact No. 2:
One barrel of crude oil can be converted to 20 gallons of gasoline!
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Top World Oil Producers, 2008(OPEC members in italics)
Country Total Oil Production(million
barrels per day)1)Saudi Arabia 10.4 12.6
2)Russia 10.0 12.63)USA 6.9 8.04)Iran 4.4 5.45)China 3.7 4.86)Mexico 3.5 4.47)Canada 3.3 4.18)UAE 2.9 3.59)Venezuela 2.6 3.410)Kuwait 2.6 3.3
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Question
If non-OPEC nations produce nearly 60% of the world’s oil, why is there so much fuss made about OPEC’s power?
Why is OPEC so important?
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A Brief History of OPEC Oil Demand increases with the
manufacture and sales of automobiles (1920s), jet engines (1950s), air conditioning (1950s), and fertilizers (1940s).
Newly-independent oil kingdoms nationalize oil companies (take them over).
OPEC is formed to coordinate production and increase prices in 1960.
OPEC today is a legal cartel with their own website: www.opec.org
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U.S. Production vs. Consumption(Millions of Barrels Per Day)
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5 Mil
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OPEC and current world reserves
World crude oil reserves are estimated at more than one trillion barrels, of which the 11 OPEC member countries hold more than 78 percent.
In other words, if non-OPEC nations keep using as much oil as they have been, the future of oil belongs to OPEC!
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The Power of Oil has Gone Up and Down with its Price So, what’s the price (and power) of oil
been?
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Fueling the Supply of Oil
-Prices of Inputs: Land, Labor, and Machinery
-Number of Producers
-Technology to find new reserves (ocean exploration, geological scans)
-Technology to transport oil (pipelines)
-Civil Strife (Wars, Unrest, Insurgencies)
-Environmental Occurrences (Hurricanes)
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Going to the ends of the earth for oil…
This is a photo of “Jack II”, a deep-water oil rig platform in the Gulf of Mexico that drills oil from over five miles beneath the ocean floor. It is owned by the Chevron Corp. 26
Fueling the Demand for Oil
-Income of Consumers
-Population Changes
-New Uses for Oil
-Prices of Alternatives (ex. Nuclear Power)
-Lifestyle Preferences (ex.Surburbia & SUVs)
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