this research looks more like an essay my professor said. so i want you please to edit this and make it more like a research paper. its about the oil production in UK. please note the it is important to add how it went from 20 years back until nowadays. please use the file attached
finall….oil_production_in_united_kingdom.docx
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Running head: OIL PRODUCTION IN UNITED KINGDOM
Oil Production in United Kingdom
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Institution
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OIL PRODUCTION IN UNITED KINGDOM
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Oil Production in United Kingdom
The United Kingdom remains one of the major importers of Oil from the Gulf areas.
Countries in the Gulf Asia have higher production rates of oil and other oil related products. As a
result of most countries from the other parts and especially from Europe and the rest of America
solely depend on oil exported from countries such as Saudi Arabia and other countries in Africa
like Nigeria (Obstfeld, Arezki, & Milesi-Ferretti, 2016). Recently, most the oil prices have been
on the decrease since the beginning of the year. This decrease in prices has a significant effect on
the oil prices across the world, and more the effect has been in countries importing and exporting
the associated product (Blanchard & Arezki, 2014). Current supply and demand factors show
that given time the price of oil-related products will stabilise though will never hit the previous
target, which was quite high. Additionally, no two countries are expected to feel the same effect
even if they have the similar characteristics when it comes to oil importation (Blanchard &
Arezki, 2014). Therefore the United Kingdom will be affected differently by the slump oil
prices, but this will also largely depend on how they control their oil prices within and outside
the country and how they engage with other parties in the oil business (Obstfeld, Arezki, &
Milesi-Ferretti, 2016). Due to the decrease in oil prices, oil exporting countries are expected to
take in less revenue in the process making their budgets be under pressure. The case is different
for oil importers who stand to benefit from the slump in prices. In essence, this is because of
several factors including improved external conditions and lower input costs. Therefore,
countries like the United Kingdom, which are importers of oil serve to benefit while their
counterparts, the major exporters suffer in silence (Obstfeld, Arezki, & Milesi-Ferretti, 2016).
Nonetheless, the rise in oil prices will have a negative effect in the traditional oil-producing
countries, and the process increases the risks of a global financial crisis since risks to financial
OIL PRODUCTION IN UNITED KINGDOM
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stability increased due to the close dependence on their economies to run on the oil exportation
and products (Obstfeld, Arezki, & Milesi-Ferretti, 2016). If these countries are not carefully
monitored then, there is a risk of oil prices affecting importing countries such as the United
Kingdom. Therefore, the United Kingdom and other importers need to carefully monitor the
effect of the slumped oil prices on the above economies.
Different oil exporters may react differently to the current crisis. Some will opt to adjust
their fiscal spending without necessarily considering the other factors and in the process they
may pressure the exchange rates (Blanchard & Arezki, 2014). Nonetheless, those having strong
fiscal rules, saving funds and budgetary allocations many not be affected by the changes. These
remedies taken by different oil exporters have a direct effect on the oil importing countries such
as the United Kingdom. Impromptu measures have the ability to affect the prices present in the
market including the price of oil in importing countries (Obstfeld, Arezki, & Milesi-Ferretti,
2016). In case these decisions are made abruptly there is a high risk of inflation setting in and the
effect will be felt overboard since countries such as the United Kingdom also depend on oil
products in running some aspects of its economies. Most oil producing countries have an
absolute advantage in the production of the product, and the cost of producing oil in countries
such as the United Kingdom is higher compared to the price in oil producing countries (Obstfeld,
Arezki, & Milesi-Ferretti, 2016). This is the major reason the United Kingdom has to import oil
and not export oil. Nonetheless, the effects of inflation do not discriminate any economy as the
effect is felt across the board. The decrease in oil prices provides an excellent opportunity for
different countries to decrease subsidies present in the energy sectors and utilise the savings in
more targeted transfers. It also offers an opportunity for countries to increase energy taxes and
decrease the other form of taxes. In case the conventional monetary policy and demand is still
OIL PRODUCTION IN UNITED KINGDOM
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weak, central banks in the United Kingdom have the option to anchor all aspects of medium-term
inflation especially when the oil prices are still decreasing (Obstfeld, Arezki, & Milesi-Ferretti,
2016). This could cushion the entire economic system.
Oil prices have decreased for close to one and a half year since the start of 2015. This
provides countries such as the United Kingdom to export more refined oil products since the
price of importation is low. Although the prices of oil may be down, oil related products depend
on the markets and may not necessarily be affected by the slump in the oil prices (Obstfeld,
Arezki, & Milesi-Ferretti, 2016). Nonetheless greater benefits will only be acquired immediately
the price of the product is recovered. Advanced economies like the United Kingdom are making
more progress in surmounting the current low interests rates present in their environments
(Obstfeld, Arezki, & Milesi-Ferretti, 2016). It is only a moment before the oil prices return to the
normal level.
Natural gas a major product of refined oil has hit the market and more so the new
economies of the world. This has significant been influenced by three main factors including the
reduction in the use of atomic power after the Fukushima catastrophe in Japan, the United States
shale revolution and geopolitical tensions between Ukraine and Russia (Arezki, 2014). The
United Kingdom could utilise the use of natural gas as it has emerged as one of the most globally
used product to run the economy. The United Kingdom, just like the United States could opt to
utilise natural gas after importing crude oil from the Gulf state countries (Arezki, 2014).
Presently, natural gas is deliberated to be the cleanest fossil fuel from petroleum products
(Arezki, 2014). The United Kingdom could become the major exporter of natural gas if it
follows the same path followed by the United States.
OIL PRODUCTION IN UNITED KINGDOM
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There have been several arguments claiming that price of fossil fuel is likely to stay in the
currents rate for long periods meaning that countries exporting oil may be the greatest
benefactors. Nonetheless, other issues have a direct impact on the use of oil products in the
current economy. Countries like the United Kingdom have international commitments to meet
especially in the climate change. Though the decrease in the oil prices provides one of the
greatest opportunity for the country to increase its revenue by exporting its oil related products to
different countries, specific innovations related to climate change should also be applied in
meeting the country’s international commitments especially those related to climate change
(Arezki & Obstfeld, 2015). Low prices fuel prices have the higher likelihood of reducing
innovation on cleaner energy technologies. The consequence would be an increase of carbon
dioxide and other greenhouse gases. Policymakers have a key role in guaranteeing that the low
energy prices in oil exporting countries do not become the major stumbling block in reducing
carbon emissions. More actions should be taken on to restore the all the appropriate incentives.
The most notable method of controlling these emissions will be to introduce carbon taxing to
avoid the devastating effects on the environment (Arezki & Obstfeld, 2015). Nonetheless, such
actions may substantially affect industrial development through industries may opt for recycling
procedures as a way to beat off the new tax measures. This approach will be better for the
country as it will be able to meet its international obligations and at the same time utilise the
presented opportunity.
The shift in the oil prices affects other areas in the market. One affected area in the
current market is the price of available metals. Similar to the oil prices, metals such as copper,
aluminium and iron ore shift basing on the supply and demand curves (Matsumoto & Arezki,
2015). These metals play a crucial role in industrial production. The recent slump in oil prices
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has also seen the decrease in the price of metals in different markets (Matsumoto & Arezki,
2015). The decrease in metal and oil price means that some parts of the economy of any country
are being stalled due to the different supply and demand shifts in the market. The unpredicted
shifts in the price of metals and oil may be there for quite some time, and therefore it is wise for
many countries to be aware of the effects of decreased oil and metal prices. If the prices continue
slumping at the same rate, then there will be a sharp increase at a given time.
OIL PRODUCTION IN UNITED KINGDOM
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References
Arezki, R. & Obstfeld, M. (2015). The Price of Oil and the Price of Carbon. IMFdirect – The
IMF Blog. Retrieved from https://blogimfdirect.imf.org/2015/12/02/the-price-of-oil-andthe-price-of-carbon/
Arezki, R. (2014). Natural Gas: The New Gold. iMFdirect – The IMF Blog. Retrieved from
https://blog-imfdirect.imf.org/2014/10/22/natural-gas-the-newgold/
Blanchard, O. & Arezki, R. (2014). Seven Questions About The Recent Oil Price Slump.
iMFdirect – The IMF Blog. Retrieved from https://blog
imfdirect.imf.org/2014/12/22/seven-questions-about-the-recent-oil-price-slump/
Matsumoto, A. & Arezki, R. (2015). Metals and Oil: A Tale of Two Commodities. iMFdirect
The IMF Blog. Retrieved from https://blogimfdirect.imf.org/2015/09/14/metals-and-oil-atale-of-two-commodities/
Obstfeld,, m., Arezki, R., & Milesi-Ferretti, G. (2016). Oil Prices and the Global Economy: It’s
Complicated. iMFdirect – The IMF Blog. Retrieved fromhttps://blogimfdirect.imf.org/2016/03/24/oil-prices-and-the-global-economy-itscomplicated/
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