Middle East Literature
Many countries in the Middle East are the major sources of crude oil that is used by the Western countries. Oil was founded in the Southwestern regions of Iran in May 1908. Since then, oil has gained a global importance in America, Europe, United Kingdom, and Africa, among other continents. According to Owen (2008), oil from the Middle East played a very significant role in the political struggle that took place in the Middle East after World War I. Discovery of large oil fields in the Middle East occurred between 1927 and 1931when there were discoveries in Baba Gargur, Persian Gulf, Kuwait, Oman, Saudi Arabia, Dubai, and Abu Dhabi. This essay analyzes the literary works of three authors: IBP Inc. 2015, Cordesman 2004, and Owen 2008, describing the discoveries, exploitations, developments, and the significance of Middle Eastern Oil.
According to Owen (2008), oil exploitation has brought about a number of benefits and challenges, not only to the Middle Eastern countries, but also to the rest of the world. One of the benefits of oil exploitation to the Middle East and to the rest of the world is the fact that it serves a major source of funds that citizens used to purchase their basic needs. However, some Middle Eastern countries such as Iraq use funds generated from oil exploitation to fund international terror which distorts the lives of citizens, both in the countries that produce it and in those nations that do not. Furthermore, oil exploitation in the Middle East is closely linked to global warming and environmental degradation (Owen, 2008).
Owen (2008), adds that oil production has greatly contributed to the stabilization of political economy especially in the Middle East. According to Owen, arrival of oil in the Middle East coincides with the creation of modern towns and industries. As oil revenues in the Middle Eastern countries continue to rise, these countries experience significant growth in their towns. The best examples of regions where oil exploitation is directly associated with growth of state is the smaller Gulf states where oil has played a big role in expansion of societies. Since oil was discovered in the Middle East in 1908, allocation of oil revenue has become part of domestic politics in the region. In addition, many oil producing countries in the Middle East rarely rely on their larger neighbors for funds to purchase resources because they have made oil revenue part of foreign policy (Owen, 2008).
Owen has recognized that Middle Eastern Oil has the potential to continue existing for another 100 years. According to Owen (2008), approximately 40 percent of the world’s oil is produced by the Organization of the Petroleum Exporting Countries (OPEC), and there is great likelihood that these countries will continue supplying many countries of the world with oil over the next 100 years. This indicates that oil producing countries in the Middle East such as Iran and Iraq will continue to be of global importance provided their oil reserves are not depleted.
Additionally, Owen (2008) points out that the world’s demand for oil is likely to rise to 50 percent by 2030 and this will require oil producing countries in the Middle East to increase their production in order to meet the world’s oil demand. For instance, Saudi Arabia alone will have to double its oil export at a constant rate in order to fully meet the global need. One thing that might pose a big challenge to oil producing countries in the Middle East such as Saudi Arabia is technological problem as far as development and management of new oil fields is concerned (Owen, 2008).
IBP, Inc. (2015) mainly looks at Petroleum production in Kuwait, one of the oil producing countries in the Middle East. According to IBP Inc. (2015), Kuwait has worked very hard to expand its oil production capacity to meet the world’s demand. Initially, small oil wells were drilled in northern Kuwait region but larger wells have since been constructed because it is anticipated that oil consumption in the country alone is likely to rise by 2 percent over the next two years. Kuwait Oil, one of the largest oil producing companies in the Middle East, is good at constructing oil production plants like the ones constructed in the Canadian oilfields (IBP Inc., 2015). Kuwait as a country has recognized that oil and natural gas will be of great significance in its electrical power generation plans for the future, and there is therefore great need to continue investing in oil production (IBP Inc., 2015).
Cordesman (2004) supports Owen’s idea that oil production in the Middle Eastern countries is projected to increase through the year 2030. Considering a number of factors, it is anticipated that the Middle East and North African region will need to expand its oil production capacity in order to meet the world’s demand. Therefore, oil producing countries in the Middle East should be prepared for the high oil demand through 2030. This is an indication that the Middle East will have a great impact on the global economy over the next 15 years. According to Cordesman (2004), such estimations are characterized by a number of uncertainties because they are driven by changes in demand which will determine the quantity of oil that must be supplied by oil producing countries. Moreover, these expectations have not incorporated the oil supply that might come from other countries outside the Middle East, suppose the world’s demand for oil increases through 2030. The Gulf States are believed to dominate the increase in Middle East and North Africa oil production capacity over the coming years (Cordesman, 2004).
Apart from the three articles analyzed above, other articles also describe the discoveries, exploitation, developments, and the significance of Middle Eastern Oil, both to the countries within the region and globally. According to Greenwood Publishing Group, Incorporated (2006), the projection that world’s oil demand is likely to rise through 2030, and that oil producing countries in the Middle East must increase their oil production capacity to meet this demand, may pose a great challenge to oil producing companies because of its reliance on demand-driven models. There is a big problem of relying on demand-driven models because the anticipations do not consider the exporter intentions from countries outside the Middle East. One thing that many people should accept is the fact that economists can make future decisions based on the current trends, but it might be very difficult to achieve those projections due to changes in political, economic, and environmental factors.
As Greenwood Publishing Group, Incorporated (2006) puts it, relying on demand-driven models to propose changes in the production capacity of oil producing countries of the Middle East might pose a big challenge because any outside influences may greatly interfere with the real outcome. It is therefore important to take some factors into account before concluding whether it is necessary for oil producing countries in the Middle East to expand their oil production capacities. First, oil exporters do not have the capacity to make accurate predictions of the demand market and therefore, they cannot anticipate the nature of oil supply globally through 2030. This explains why the Middle East should invest more in oil production and exporting facilities when the economy is strong and minimize similar investments when the global economy is weak (Greenwood Publishing Group, Incorporated, 2006).
Second, Middle East and North Africa oil producers are only volatile in the long run but not in the short run. It is therefore important for oil producing countries to revise their energy plans and to incorporate the changing conditions. Lack of volatility of Middle East countries in the short run makes it very difficult to project possible impacts suppose a country fails to increase its oil production capacity when global demand for oil rises. Third, many oil producing companies doubt the soundness of demand-driven models arguing that countries in the Middle East will not be able to pay for the high level of export that will occur following an increase in their oil production capacity. Therefore, they cannot struggle in increasing their production capacity before the world’s demand for oil rises, but they will wait for such changes to occur. These companies take such a position because they believe that it is an increase in revenue that should justify the investments (Greenwood Publishing Group, Incorporated, 2006).
Jones (2011) explains that vast democratization and liberalization are very crucial if oil producing countries in the Middle East want to reap good revenues from oil exploitation. This article gives example of the impact of political instability on oil production and supply in Iraq and Russia. According to Jones (2011), the high oil price is a clear indication that the political mayhem in the Middle East cannot be solved in the near future. Russian oil production was affected in mid 1990s during the Soviet era from 12.5 million barrels per day in 1980s to 6 million barrels per day. The country realized a turnaround in production in the year 1999 following the collapse of the Soviet Union. Currently, Russia has recovered from the crisis and it is moving towards in peak production (Jones, 2011).
With the current Iraq Wars, the Middle East is likely to be on a similar path as Russia. Oil production in Iraq fell drastically following removal of Saddam Hessein in power. However, Iraq realized tremendous improvements in oil production after the war. If Iraq and Afghanistan continue to engage in endless war, Iraq’s oil production capacity will fall, leading to a rise in oil prices, both in the Middle East and globally. The case of Russia and Iraq best explains why oil producing countries in the Middle East should not rely on demand-driven models when they are making a decision of whether to expand their oil production capacities in preparation for the anticipated increase in world’s oil demand through 2030 (Jones, 2011).