The five most important global change issues to OPEC countries


Sonia Yeh 09/01/97

OPEC stands for Organization for Petroleum Exporting Countries, which includes Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar/USE, Saudi Arabia, Venezuela, and so on.

OPEC nations act on the specifically economic issues of oil prices. Their expectations pertained to whether price adjustment would enhance their income. Therefore, the first obvious common interest for OPEC about global change issue is the oil price. The price of the oil has great influence not only in OPEC countries but also in all other countries in the world as well. The oil prices could have great influences ranging from direct problems such as economic impacts/stability to indirect problems such as pollution problems, regionally and globally. The five most important global change issues I would consider here include oil prices, alternative energy sources, greenhouse gas/climate change debates, development of middle-east peace process, and environmental pollution. Most of these questions are somewhat interrelated with each other and I would like to discuss these issues by cross-examination.

By changing the prices, OPEC would at least consider its direct impacts on (1) the world demand for energy; (2) non-OPEC oil supply; (3) stimulation of alternative energy sources. Even though a high price might increase their revenues in the short term, but this would also encourage non-OPEC oil supply, and stimulate development of alternative energy supply, thus result in a reduction of OPEC share of the world's energy market in the long run.

Alternative fuel technology development and policy debate have great impacts on OPEC as well. Development of alternative fuel sources would change future oil prices and OPEC's market shares. Scientists' debates on environmental policies (especially on atmospheric warming) would influence governments' decisions on energy usage, carbon tax, international treaty on CO2 emission, technology innovation. All these issues are correlated with oil price issues and concern OPEC's welfare in the long run. For example, environmental regulation and technology innovation and different opinion of climate change would slow down the alternative fuel demand and sustain the price and market share of OPEC.

As like any of other countries in the world, OPEC countries also have to face the more serious potential harm to environmental pollution problems in their own countries. Inadequate water policies have aggravated the consequences of water scarcity problems. Lack of proper water project and technological disadvantages, OPEC countries in the middle-east countries faces water systems problem and thus defer modernization in their countries. This water issue compounds with global climate change would raise even more attentions and policy issues in OPEC countries. Other than oil price concerns, atmospheric warming problem also cause serious concerns on some special topics to middle-east countries such as land lost to urbanization, unmanaged ecosystems lost to agriculture. Other environmental challenge includes soil, air pollution, noise pollution, the protection and preservation of wildlife and hazardous materials.

Economic growth in the Middle East seems to be highly dependent on political status. The peace process can unlock the potential for economic growth and lead to great gain. This would include reductions in military expenditures, increase external supports, reduction in investment risk/cost, and increase regional affinities and cooperation.


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