The Future of Oil - Article Analysis

Student Name:

Jennifer R. Thomas

Article Number and Name:

Article 26

“It’s Still the One” by Daniel Yergin

Work Cite: Jackson, Robert M. Global issues 13/14 (1st ed.).

Date:

2-23-2017

BACKGROUND

What qualifications does the author have for writing an article on this subject? (This may also apply to quotes within the article.)

“Daniel Yergin received a Pulitzer Prize for The Prize: The Epic Quest for Oil, Money, and Power, published in an updated edition this year. He is chairman of IHS Cambridge Energy Research Associates.” (p.113, Jackson) Yergin is the founder of Cambridge Energy Research Associates, (CERA), a member of the National Petroleum Council and a Global Energy Expert. He’s a graduate of Yale University with a BA and Cambridge University with a PH. D and has two honorary degrees, one from The University of Houston and the other from the University of Missouri.

http://www.cnbc.com/daniel-yergin/

Chair of a task force for the U.S. Department of Energy, (p. 111, Jackson)

When and where was the article first published? Does this affect its credibility?

The article was published by the Foreign Policy in September/October 2009, pages 90, 92-95. Foreign Policy is a very reputable resource and Daniel Yergin has a very extensive background and knowledge about the Oil industry, however, the article is not a recent as most valuables resources are or that I would like to base my conclusions off of. I would have to say that the information provided by Daniel Yergin is credible but would like to see updated information to verify/confirm this article.

ARTICLE ANALYSIS AND EVALUATION

Describe the main purpose, what conclusions the author drew, and what assumptions the author made in this article.

The purpose of the article is to give a perspective of the future of Oil globally and the impact Oil will make on regions globally. Volatility impacts many people, not just those in the oil market and worldwide. The article explains how the oil industry has changed over the years due to such things as technology, climate change, how it is used and how much is used.

What is the author’s point of view for this article? (What other points of view are there?

Cushing Oklahoma’s oil allows them to play a role in the price of oil. Oil trading is a financial asset but unstable. Oil prices over the years have fluctuated from a high dollar to a very low dollar per barrel rate, with prices varying from $147.27, $59.87, $32.40 and as low as $10.00/barrel. Big oil industries have grown and control over eighty percent of the oil industry, while the smaller ones have disappeared. Oil get sold and traded to be turned into gasoline jet fuel, diesel, home heating oil and more. The demand for oil has changed, how we use it, how much we use and technology can change the energy portfolio as well. The oil industry has changed in that if offers pension funds, endowments, and hedge funder and includes money managers to assist with the finances attached to the oil industry. Oil use will increase as energy demands increase in the up and coming years. The increase in oil demand has impacted the pricing of oil. The increasing demand has also caused tension between countries such as China and the U.S. and Britain and Germany due to scarcity. China has secured future oil by giving loans to those countries that are oil producers. The conflict between China and the U.S. is not just about oil but includes coal to where they both are the largest consumers of coal and the largest resources of coal as well. Climate change also impacts the future of oil which gives an additional reason to drive down the demands for oil. Technology needs to be used to find an alternative for oil use. Ideas of alternatives are electric cars, advanced biofuels, solar systems, new building designs, massive investment in wind, integrating electric cars with the electricity industry, and a revolution in the internal combustion engine. (p. 112, Jackson) The Government has taken an increasing interest, giving incentives and subsidies that will drive technical change. Decrease demands and becoming more energy efficient has been a focus of the United States and has been doing well. Resources do however show that there is enough oil to keep up with the demands for years to come but restricted access, tax systems, civil conflict, geopolitics, rising costs for exploration and production and uncertainties about demand could interfere with oils reaching consumers. The final conclusion is that the oil market is not constant and that many things change the supply and demand of oil and the price of oil, the oil industry is unstable.

List new terms introduced and define them. You may also include any important information that was presented in this paper.

Volatility- “Liability to change rapidly and unpredictably, especially for the worse.” www.dictionary.com

Somnolent- “sleepy, drowsy, tired, lethargic, sluggish.” www.dictionary.com

WTL-West Texas Intermediate (p. 110, Jackson)

Hedgers- “A person who builds or repairs hedges (any barrier or boundary, a row of bushes or small trees planted close together, especially when forming a fence or boundary” www.dictionary.com

Speculators- “the financial players.” (p. 110, Jackson)

Supermajors- “a term applied to the six largest Oil companies in the world.” www.oilprices.org

Paper Barrels- “an oil cargo that is sold and traded on the open market, but not actually shipped.” www.wisegeek.com

Muskier-as an odor www.dictionary.com

Wherewithal- “that with which to do something; means or supplies for the purpose or need, especially money”. www.dictionary.com

Were any propaganda techniques used in an attempt to influence readers? Explain. (See explanations at the end of this document.)

I found this article to have very little if any propaganda. The article was based on statistics and was pretty matter of fact. One attention grabber for me were the highlighted statistics throughout the article, such as the bold and underlining of the cost of oil per barrel on page 111 and the on page 112 on the number of barrels the world demand rose. These would be a form of bandwagon propaganda. Page 110 also described the Oklahoma sun as “hot”, “sweet” crude oil, could be described as a form of propaganda. Other propaganda was the use of big name oil companies that people are familiar such as Exxon Mobile and Chevron and other not so big but still familiar like Amoco and ARCO.

CRITICAL THINKING – ARTICLE-SPECIFIC QUESTIONS

* Refer to the weekly folder for the questions you are required to answer.
The questions are located in the Critical Thinking section at the end of each article.

Question #

Answer

1

The age of oil is changing because the government is giving subsidies and incentives that will drive technology change and help decrease the demands for oil. Climate change also impacts the change in the new era. In addition to climate change and technology, there are now more players in the oil industry like financial managers, investors, hedgers funds and more.

2

The demand for oil is changing in that the demands are decreasing, take the example of the United States who are twice as energy efficient as they were in the 70’s, electric cars are gaining more attention, advancement if biofuel, solar systems that are now being given attention as well as the wind. The government is giving more attention to energy efficient ways to improve the economy and reduce the demand for oil.

3

The U.S. and China relationship is one that not only deals with competing over oil but they also compete over coal as well. They are the largest resource of both. They have the same interest new technology solutions for the emissions released when coal is burned.

4

Article 3 is complemented by Yergin’s article, article 26 because both are making the point that the challenge of reducing consumption of fuel/oil is a difficult challenge and will involve many competitors, better technology and the involvement of the government.

ADDITIONAL NOTES OR OBSERVATIONS

This article was interesting because I did not realize how much the United States and China were in competition over oil and coal. I am old enough to remember some of the fluctuation in the changing of gas prices. I also find the information of this article very useful because of recent debate that a group of co-workers and I were having over climate change, energy efficient cars and biofuels. A team member was looking at purchasing an energy efficient car, which we found the team was divided as to for or against the talk of climate change and its existence.