Oil Importance

Oil is one of the most beneficial and harmful elements for humanity. It serves as fuel at our homes, transportation and also various petroleum products help us in our daily living. On the other hand, is an essential element for war, it is used as fuel for ships and airplanes, and lately is identified as something that can adversely affect the economy of those countries that produce it and those who depend on it. Oil is the most important source of energy recently used and is a raw material in a lot of the chemical industry processes. It is a fossil resource that it is used as a primary source of energy since the end of the XIX century. Based on the huge importance of Oil in our life the increase or decrease of its price is a matter of very

With lower gas prices people save more money and can spend it in other goods and services therefore raising that nations GDP. But for exporting countries the declining oil prices are harmful, because they suffer potentially budget downfalls. In major exporting countries such as Russia and Venezuela the downfall of oil prices is harmful for their economies. The oil extraction and production costs it normally maintain as a standard in the short run and if the sales are made at a cheaper price the revenues are less than expected. But in a long term it may become dangerous because oil producing countries budgets were based on expectations of $100 or more per barrel ( ).
Although it might not be good news for oil producers, it’s great for consumers and the global economy. Ten dollar fall in the price of oil transfers the equivalent of 0.5 percent of world GDP from oil producers to oil consumers this is because consumers will start spending the money they are saving in gas prices in other products, production and consume has a direct relation (Phillips, 1), assuming that a $10 fall in the oil price would boost global demand for goods and services by 0.2 to 0.3 percent (Phillips,