Impact of looming oil crisis on global trade

Impact of looming anele crisis on global trade The availability of OLL Is taken for granted every day by businesses, governments and individuals alike. However, an petroleum crisis Is looming and could feasibly summate at some(prenominal) point. This brings back memories of the oil shortages during the asses, which had a major invasion on the economic growth, particularly In major Industrial countries such(prenominal) as united States. During the 1973 oil crisis an embargo initiated by the Organization of PetroleumExporting Countries (OPEC) to confess against some of the American trade practices. As a result of this embargo, the legal injury of oil increased by 300%, create widespread oil shortages and in some cases forcing petrol stations to close. Experts have warned that similar crisis whitethorn be Imminent, with Western countries presence In the middle east causing friction with some of the countries who are members of OPEC. 011 prices have been change magnitude In um teen areas in an attempt to reduce inspiration levels and protect our natural resources.However, research has indicated that despite these measures the consumption of 011 delays to Increase, with an estimated 89 million barrels of oil organism used globally every day. Should a crisis like this hit, the effect on the global providence will be huge import materials and goods has require an essential practice for larger organizations, but any(prenominal) increase in oil price would dramatically increase the transportation cost of importing and exporting.As a result, companies would need to either seek cheaper alternatives, or more probably raise the cost of their end product, something which will slow the growth of the economy and prolong the recession. Travel has become a major source of expense for large firms, with employees often flying to business meetings Internationally as sanitary as domestically. Budget airlines turnover has grown throughout the recession as a result of the increase in business travel, however any increase in the cost of oil would force these airlines to pass the costs onto their customers in the form of increased air fares.In the event of another oil crisis, businesses which currently have large travel expenses would suddenly find themselves with vastly increased overheads, and have a sudden need to explore cheaper alternatives which whitethorn not suit their business plan. Transportation is by far the biggest answer of oil consumption, with this sector estimated to account for more than half of all consumption worldwide, and more than two thirds of consumption within the US.As well as Increased transportation costs, the costs of operating machinery would also Increase during an OLL crisis, leading to Increases In the cost of many essential items, including foodstuffs. As with the rising cost of transportation, any increase in Experts are unsure when another oil crisis capacity hit, but most experts agree that a crisis of s ome sort is seeming to occur soon. While the exact effect it will have on the world economy cant be accurately predicted, there is no distrust that businesses of all sizes will need to adapt very quickly to continue trading.