Importance of Crude Oil
Crude oil is undoubtedly the king of commodities, in both its production value and its importance to the global economy. Crude oil is the most-traded non financial commodity in the world today, and it supplies 40 percent of the world’s total energy needs — more than any other single commodity. Since 2006, the importance of crude oil has only increased.
Despite many calls to shift energy consumption toward more renewable energy sources, the crude reality is that petroleum products are still the dominant resource worldwide. In fact, to this day, more barrels of crude oil are traded daily (87 million barrels by 2010 figures) than any other commodity.
Crude oil’s importance also stems from the fact that it’s the base product for a number of indispensable goods, including gasoline, jet fuel, and plastics.
Oil is truly the lifeblood of the global economy. Without it, the modern world would come to a screeching halt. Drivers wouldn’t be able to drive their cars, ships would have no fuel to transport goods around the world, and airplanes would be grounded indefinitely.
Because of its preeminent role in the global economy, crude oil makes for a great investment. However, the oil industry is a multidimensional, complex business with many players that often have conflicting interests. Proceeding with a bit of caution and making sure that you understand the market fundamentals is essential for success.
Oil in the US
The 19th century was a period of great change and rapid industrialization. The iron and steel industry spawned new construction materials, the railroads connected the country and the discovery of oil provided a new source of fuel. The discovery of the Spindletop geyser in 1901 drove huge growth in the oil industry. Within a year, more than 1,500 oil companies had been chartered, and oil became the dominant fuel of the 20th century and an integral part of the American economy.
Oil in the UAE
In the 1930s Abu Dhabi was a poor fishing village on the edge of the desert, but the discovery of oil has revolutionised the Emirate. It is thought to possess the sixth largest proven oil reserves in the world and is now extremely rich.
Abu Dhabi is often described as the world’s richest city but in the 1930s the opposite was true. Situated on an island, it was a simple fishing village with a fort. Although the local economy had once prospered on the pearl trade, cultured pearls from Japan destroyed the market for natural ones, ruining the trade and bringing poverty to the population. The rest of the emirate comprised mainly sand, with settlements and date plantations around the oases of Liwa and Al Ain.
Today, the main producing fields onshore are Asab, Sahil and Shah, and offshore are al-Bunduq, and Abu al-Bukhoosh (ABK). Oil production in the UAE was in the region of 2.3 MMbopd in 2010, and it possesses the sixth largest proven oil reserves in the world; and is putting together plans to boost production to 3 MMbopd.