FINAL ESSAY PAPER ON OIL AND GAS STUDENT NAME: Guldana Temirkhan ID NUMBER: INSTRUCTOR NAME: Saule Bakenova December 7, 2008 Introduction Today oil and gas are the commodities of big importance and they have huge affect on the relationship between all the countries in the world.Moreover, every humankind lives in a time when dependency on energy supply is very high and it illustrates our living standards, level of civilization, and industrialization according to the amount of their consumption . But we shouldn’t forget about rational usage of oil and gas that really will bring us high quality of life, physical and mental.
During some countries like Denmark and Holland have shortage of natural resource or non-fuel electricity they are able to generate the energy from coal, hydrocarbon, or imported fuel on thermal stations and wind stations Kazakhstan have all the Mendeleev’s table on the territory and oil is not the primary natural resource that should be accented on. But everything someday will come to an end including oil and gas. But today people want to get benefit for them as much as possible and common usage of these resources will bring them to disappearance which, simply, means Tragedy of the Commons.
As it was stated before Kazakhstan has all necessarily resources to survive and huge oil and gas reserves in particular, but because of fluctuating prices of oil on the world market and dependency of these black gold all around the world country might be under the damage of Dutch Disease through the exporting only one particular natural resource such as oil and natural gas. Also it will bring the break into non-oil sectors . Finally, it is very important to improve the economy of the country by developing of other industries like metallurgy, agriculture, and water fish industry will bring break into other fields.
Moreover, what is very interesting is scientists stated that fish reserves in Caspian Sea are a little bit more than oil reserves in Kazakhstan.
Main Body Let me start from the OPEC (Saudi Arabia, Iraq, Iran, Kuwait, Venezuela, etc.) countries. From the very beginning they were only one major natural resource producing countries. The reason is very simple. They have no other resources to export and to make their economy improved. But in Kazakhstan we have another picture.Besides the oil and natural gas reserves Kazakhstan also has a lot of other resources of profit such it was stated above (metallurgy, agriculture). According to the food crisis in all over the world day by day over and over prices on food increase whereas food supply is fade out for today.
Thus the solution of the problem is Kazakhstan simply must to develop other industries in order to prevent hunger in the world.For example, expansion of agriculture in Kazakhstan, in particular cattle breeding which will generate more milk and meat and production of rice, corn, and sunflower.
Actually, these products are very important and vital for making our own lives and somehow avoid the hunger. Moreover, development of agriculture will also bring a profit to our “country’s budget”. Additionally, there is one useful suggestion for development of the agriculture industry. As it was in the period of USSR factories were very specified just on one type of production.For instance, if it was factory producing only sunflower and if it was not plenteous year at 1985, but there was good harvest on rice, so they had lack of technologies at that time and had no possibilities to transform from food industry to another in order to be more universal.
Thus it means that today we must be able to shift from one field to another as quickly as it possible, because old system that was set in USSR like specialized only on one product “five-year factories” don’t get going well in modern life, because nowadays everyone must be competitive in a world arena in order to prevent both Dutch Disease and collapse of non-oil industries. For today factories should be more universal and wide specialized in order to satisfy all people’s demands.
The real example might be China that easily can transform from one to another fields that each of us can imagine.If Kazakhstan produce and export only oil and natural gas we entirely are dependent on prices of stock exchange such as Wall Street, Dow Jones, and NASDAQ. For instance, if the price of oil is 120 USD per barrel, so everything is perfect for the economy of Kazakhstan and we have not to worry about anything.
But for today the price on oil is about 45 USD whereas country’s budget price is 60 USD per barrel. Accordingly to this information we can see the result- shortage of 20 USD per barrel in budget of Kazakhstan.And following next question sounds like this: Where is the money from sold oil last year when it there was a price 120 USD per barrel with the surplus of 60 USD for the budget? Unfortunately, we will never find the answer, because policy and economy of Kazakhstan is not pure and, moreover, money gained from the oil production is directly going to the national fund of Kazakhstan, whereof no one of us knows about this fund at all and about amount of money in the fund is also unknown for the citizens of Kazakhstan.
I think that all about these know only approached people to the President, Nursultan Nazarbayev.So that, respectively to all above, I want to add that my grandfather’s and great-grandfather’s well- gotten property in the past do not affect on me and my prosperity in particular in no way and I don’t feel that oil brings us social well-being, economic and political stability.
Because I could not see the dividends gotten from oil production in Kazakhstan, and I am not single in my thoughts. Therefore oil and gas sector in Kazakhstan is not acceptable neither for the nation nor for the economy of the country.Also for today we should find other appropriate alternative resources to avoid resource curse in the future.
I can suggest peaceable atom that is located on the territory of Kazakhstan with a huge reserves. Moreover, Kazakhstan is one of the ten countries by the amount of their uranium reserves. Uranium is very powerful energy source that allow producing huge quantity of energy per small amount of uranium itself.So, I presume that it would be better to invest our own oil-dollars into development of uranium rather than put those money somewhere in national fund of Kazakhstan that people even do not know about it. I think that uranium is a natural resource of the future that can proudly be a major energy source.
And what about producer countries nationalist tendencies.As I know, for example, Chinese nationalistic tendency is to produce rice, Brazil produce coffee, India produce tea, Uzbekistan produce cotton, and Kazakhstan nationalistic tendency is to produce oil and gas. But all listed countries except Kazakhstan produce renewable natural resources which mean that they have less chances to face resource curse rather then Kazakhstan.
Because oil and gas reserves will disappear someday, and in all it will be sufficient only for about 40-50 years. And in other hand, I think that Kazakhstan’s nationalistic tendency should be corn, not oil and natural gas. Corn is also renewable resource and very demandable.Conclusion To conclude, I want to say that the reason of most countries’ dependence on each other’s oil and natural gas supply is might be desire to become more influential.
Of course oil is number one commodity that makes other countries dependent on you and gives you influence over those countries.As Winston Churchill said: “If we cannot get oil, we cannot get corn, we cannot get cotton and we cannot get a thousand and one commodities necessary for the preservation of the economic energies of Great Britain.” It means that anyway to survive in hard times or just make our own lives country should contribute oil-dollars to other industries in order to have prosperity in our state.
But again, it should be rationally procured and utilized. Moreover, gotten dividends from the oil production must be distributed to the nation, because I think that it would solve a lot of problems that Kazakhstan has today and improve the economy of the country. Bibliography Clo A Key players and structure.Oil economics and policy. (2000) 37 Li X Diversification and localization of energy systems for sustainable development and energy security.
Energy Policy 33 (2005) 2237-2238. Pomfret R Kazakhstan’s economy since independence: Does oil boom offer a second chance for sustainable development? Europe-Asia Studies. Vol. 57, No. 6, September 2005 Smil V Energy Linkages. Energy at the crossroads: global perspectives and uncertainties. (2003) 72.