Assignment 7.1: Dialogue 7 — Oil Producers vs. Oil Users

The world economy in the early 21st century has been characterized by continuous tensions between the developed countries, which are dependent on stable oil and gas supplies, and the countries that possess these natural resources in abundance. However, this is not the first time that such tensions have shaped world macroeconomics and politics. Already after the first oil crisis in 1973, some European countries called for improved communication and coordination between the world’s largest oil producers and the world’s largest economies. Nevertheless, those suggestions were largely ignored, and, in 1974, the International Energy Agency was formed to represent the interests of oil-consuming countries and to create a counter-balance to OPEC.

The second oil crisis in 1979 and the First Gulf War in 1990 proved, although many thought otherwise, that the international community had not learned that a collapse or spike in the price of oil could cause confusion in the international oil markets, damaging both consumers and producers alike. Political problems stemming from the fact that none of the most developed countries are energy sufficient cannot be blamed on oil alone. Recently, Russia has been using its dominant position as a supplier of natural gas to Western Europe as a leveraging tool in its dealings with the EU policymakers.

Many countries around the world do indeed perceive their dependence on energy as a potential source of strategic problems and actively promote alternative sources of energy, such as solar (Spain, Morocco), wind (Southwestern US), or bio-fuels. The global appeal of the Japanese bullet trains, and the expansion of this rail system to Europe in the 1980s and 1990s, to China in the early 2000s, and to other Asian countries in the near future, is a valid example.

All issues related to energy use are closely linked to environmental policies, which have had a significant impact on several industries, and perhaps none more so than the automobile industry. For example, a few major cities, including London and Paris, have made it progressively more difficult for drivers to use their private cars.

In this dialogue, we will be taking a close look at the issues surrounding oil dependency, consumption, and production in today’s globalized market.

Procedure

1. Research the Internet for information on the political and economic relationship between the US and EU on one side, and the major oil-producing countries in the Middle East on the other.
2. By the end of Wednesday, post to the Forum a substantive position in which you compare and discuss future scenarios in these relationships. Answer the following:
   1. How are U.S. approaches to oil-producing countries and bio-fuel applications different from those of the EU?
   2. How may those future developments affect the car industry?