Assess the extent to which governments shape the global oil economy Essay - 1

Assess the extent to which governments shape the global oil economy. In your analysis, consider the respective roles of nature, industrial structure and war - Essay Example Often, governments use regulatory policies such as tax exemptions to encourage private companies to drill oil in the region. The Iraqi government pays oil-drilling companies a fee per barrel, as an incentive for them to meet the unrealistic quotas it sets (Muttitt 2012, p. 1-2). Corruption amongst government officials remains the biggest challenge of oil production in the region. For example, the two ruling families of Kurdistan destabilize oil production in the region through indiscriminate trading of oil through corrupt means (Muttitt 2012, p. 1-2). Generally, any form of conflict, be it external or internal adversely affects a country’s economy. Jones (2012, p. 208) infers that successful oil production in the Middle East peaked US’ interest, which in turn led to the latter invading the former. Years of war adversely affected the Middle Eastern states especially their economic output. Muttitt (2010, p. 1), states that nine years after the withdrawal of US troops from Iraq resulted in increased oil output whereby in 2011, Iraq ranked second among other countries affiliated with OPEC. In conclusion, civil war, unfavorable government policies, and the limited nature of natural resources adversely affects oil production across the globe. Weeding out corruption in government, adoption of renewable (alternative) sources of energy, and preventing the onset of war are factors likely to improve the global oil