Black gold (crude oil)

Introduction

 crude oil is naturally occurring thick, dark brown flammable liquid which Is
derived from fossil fuel.
 Crude oil is also refer as black gold as it of immense economic importance.
 It is an non renewable source thus its demand ˃ supply leading to high
price rise.
 An international body called OPEC control the pricing of oil all throughout
the globe.
History of oil production

 in 1854 The invention of the kerosene lamp creates intense demand for
oil.
 August 27, 1859 Edwin L. Drake drilled the first successful oil well 69 feet
deep near Titusville in northwestern Pennsylvania. USA
 1860 World oil production reaches 500,000 barrels annually.
 1874 Oil production soars to 20 million barrels annually
 1879 First oil well drilled in California.
 1902 Oil discovered in Mexico.
 1908 Oil discovered in Iran
 1913 Oil discovered in Venezuela
 1927 Oil discovered in Iraq
 1930s Britain gains control over Iran's oil fields and the United States
discovers oil reserves in Kuwait and Saudi Arabia.
 1960 Iran, Venezuela, and Arab oil producers banded together in to
negotiate for higher oil prices (Beginning of OPEC)
 What is crude oil

 Crude oil is naturally occurring thick dark brown flammable liquid find in
upper strata of earth crust.
 It is recovered mostly through oil drilling then refined it into large no. of
consumer product like petrol, kerosene deseal etc.
 It is type of fossil fuel consisting of complex mixture of hydrocarbons
Why crude oil called black gold

 Petroleum products extract from crude oil which is black in color

 Availability is limited but demand is more
 Its economic value is immense
 Causes the inflation and affect the pricing almost everything
World oil production
Factors effect oil prices

 Changes in supply and demand.

 Global equity market.
 Movement in dollar.
 Increase in tax rate.
 War’s, recessions and other natural calamities are important facors.
Role of opec

 Organization of petroleum exporting countries is an intergovernmental

organization of twelve oil producing countries.
 It founded in 1960 with five members.
 It regulate and control global oil price
 Its main objective is to peruse various ways and measures to stabilize the
price of oil in International Markets
Effects of oil prices high

 Rise in Inflation Rates.

 Government spending on Subsidy Increases.
 GDP is affected negatively.
 Foreign Currency reserves reduce.
 Prices of almost everything increases, causing extreme hardship towards
the common man.
 Leads to wars, protests and political instability
 2.5% decline in USA GDP due to rising oil prices.
 Prices hit a shocking $150 per barrel leading to rapid inflation.
 A $10-a-barrel increase in the price of oil reduces U.S. GDP growth by 0.5
percentage points.
 Peak oil

 Peak oil is theorized point of time maximum rate of

extraction of petroleum is reached after that is
expected terminal decline. This theory is based on
observed rise, peak, fall an aggregate production
rate in oil fields over time.
Impact in indian economy

 Rising of crude oil effect to fiscal deficit

 Impact on indian rupee prices
 Inflation
 Effect on economy
environment

 Extinction of whales.
 Extraction of Oil leads to land degradation.
 Global Warming: petroleum releases carbon dioxide, a greenhouse gas.
 Oil Spills: damages land, pollutes water and kills marine animals.
 Tar balls: huge blob of oil causing contamination and pollution.
alternatives

 Solar power
 Wind power
 Hydro electricity
 Nuclear energy
Thank you