What are the advantages and disadvantages of being an oil-rich country?

What are the advantages and disadvantages of being an oil-rich country?

African nations like Ghana, Uganda, Tanzania and Mozambique have found new sources from the nature but a prevalent question comes up that whether such bonuses will be a boon in order to bring about a well-being for the political and economic fields or will it be a curse which has been like in rest of the nations?

Typically nations whose natural sources are rich they perform inadequately than those nations who have no such natural resources. Generally they tend to progress less rapidly and with less balance in the act which is exactly the opposite of should be the result. Eventually having to pay tax for natural resources will not lead to evaporate which is definitely a huge ways for the government earnings and can be utilised for the sectors like education, well-being departments, progress and enhancement of the nation.

The science involved in the prose of the fiscal and political sector has lot many times tried explaining the reason for the curse and also what all communion associations have emerged out of it. The major three economic jinx that are famous:

·        Nations which are rich in natural resources have a stronger money power which decelerates the exports

·        The extraction of natural resources creates specific and technical job opportunities and thereby leads to unemployment

·        Unbalanced cost of the resource leads to an unstable development supported by offshore financial institutions that pour in when the cost of the products soar and stops pouring in when there is a turn down by such institutions.

Besides nations who have rich natural resources does not push themselves for a balanced way of progress and they neglect to identify as to how to create assests and transform into wealth with those products which are found viably than getting inferior. The unorganised operation of the political system worsens and aggravates the issue and the war for the eligibility for resource fees leads to an increase to red-tapism and autocratic administration.

A low rate of exchange, a balanced money support, a vigilant asset management, an embargo on the system to borrow and lend and simplicity are the diverse cures for the above mentioned issues. But a rapidly emerging agreement of such remedies is not enough. Nations that are new on their resources will take more measure in order to raise their resource which they deem as a boon.

The new nations strive hard so that they can give full potential to their citizens and that they are able to utilise the natural resources. A conflict of interest arises between the nation who has the natural resource with the international client organisation. The host organisation tries maximising the pay whereas the client organisation looks to its own benefit. A well operated and an edge in the composition along with simple sales can produce more government revenues and with that it should be borne in mind that the agreements should not have any discrepancy and should make sure that if the costs are rising they it will lead to a profit which is to be shared.

Sadly there are loads of other countries who have agreed to the deals that are enough to give them a minimal share of the reserve’s worth to multinational organisations. The very humble answer is to re-bargain the terms and also to put into effect the bonus gain duty.

Globally such measures are put into effect although the organisations of such natural reserves take a step back and highlight the sacredness of the agreement and intimidate to depart. The result is different and hence a long lasting association can be put into effect if a re –bargain can be done.

Such amazing growth is seen in Botswana’s growth after it re-bargained for the first time in forty years. Even nations like Bolivia and Venezuela re-bargain who are in the league of being developing nations and those nations who are already developed are Israel and Australia who have done pretty well along with Unites States of America who has enacted the gain of bonus excise duty.

The financial profit that is made through the natural reserves should be utilised for marketing progress. The imperialist rulers viewed Africa to be a place where there is abundant natural reserves and the same behaviour and mental state till exists amongst the new merchants as well.

Roads, rail and ports have a common target and it is to achieve the reserves out of the nation at the minimum freight charges with no hard work to handle it inside the nation an permit the indigenous businesses to be lying down their foundation.

True sense of progress needs the invention of all relative inter-connections like that of preparation of the indigenous work force, emerging small and medium dimensions of enterprises in order to offer raw materials for the operation of mining of the oil and the gas organisations, national dispensation and also to integrate the reserves of the nation for the economic pillars. Well today all these nations although may not have such advantages which can be compared of the activities but will still should stand by their nation to be its support. This view point only speaks that the nation’s advantage is to have the other nation to misuse their natural reserves.

In fact such an act is not correct and what really matters is the dynamic ever evolving relative gain in the future which can be given a frame work. South Korea had such a gain forty years back in the sector of producing rice. If South Korea had stood by their power it could have been a monster in its sector today. Today it could have been one of the most competent rice producer nations but it is not rich.

The other organisations will say Ghana, Uganda, Tanzania and Mozambique to function rapidly but there is sufficient reason for these nations to grow consciously. The reserves will not diminish, since the cost of the products are on a rise and in this times these nations can place their rules and regulations and laws that will be required to make sure that the reserves are utilised for all round development of the natives and inhabitants of the country.

Natural reserves should be treated as a boon and not as a bane and they will be eventually but it will take its own sweet time to take place.

Advantages of Oil

1)      High Energy Density - Having the highest energy density is to mean that it requires very little energy to produce a lot of energy and that is oil. Such a feature makes oil the most favoured option for the utilisation as power in vehicles.

2)      Easy Availability, Infrastructure for Transport and Use – Oil is widely used and available natural resource and it is supplied equally globally. A humungous infrastructure to carry oil to the parts of the world is done by the help of oil cargo ship, pipe-lines and through tankers.

3)      Crucial for wide variety of Industries – Oil is an imperative module in the diverse industry sectors and it is tough to think of any other product who has such diverse role to play starting with the products used by the humans like petroleum jelly to clothes and even in the production of medicine.

4)      Easy to Produce and Refine – It is not difficult to produce oil and mostly now oil is produced in mines that are off the coast and in tar sands. The refinement and purifying of oil methods is very old and it ages which means that the purity of the oil makes it suitable for the utilisation of petrol and diesel.

5)      Constant Power Source and Reliability – Oil has the capacity to produce itself non-stop unlike solar and wind energy and hence oil energy is known for its reliability , they are established methods and are trustworthy to operate with.

Disadvantages of Oil

1)      Greenhouse Gas Emissions (GHG) – The basic disadvantage of oil is that it emits Carbon Dioxide which was insulated in the remains of the dead animals and plants and it transforms it back to earth leading to global warming.  World-wide agreements have not been able to put an end to this emission but nations are trying their bit to put a sieve on this harmful emission.

2)      2) Pollution of Water and Earth – Spilling of oil harms the marine and also the universe as a whole leading to innumerable death in the marine aquatic life and also harming the balance of the eco-system. The BP oil spill had rippled a loss of billions of money and such smaller spills still happen on a regular basis.

3)      Growth in Terrorism and Violence – Saudi Arabia and other African countries are the host of oil producing nations and is the worst type of autocratic rule. The money reaches the rulers who have accumulated three times billions of dollars and this gives rise to ferocity and development in radicalism since the money is utilised for supporting various anti national organisations.  Osama Bin Laden was amongst the richest families of Saudi Arabia. Nevertheless the strength of the oil money also incapacitates the protests that rise.

4)      Emission of Harmful Substances like Sulphur Dioxide, Carbon Monoxide, Acid Rain – Oil producing plants emit harmful components which is harmful for human life and also to the ecology which produces Acid Rain .Although new methods and systems are involved in order to cut down the emission but they still are dangerous for man-kind.

5)      Leads to production of very harmful and toxic materials during refining, Plastic is one of the most harmful substances – Oil is a compound of a mixture of Hydro-carbons which has residues of Sulphur and other components. Purifying oil results to the manufacturing of dangerous gases and compounds like Carbon Monoxide and plastic as well.

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