GLOBAL BUSINESS ENVIRONMENT

Oil Industry of UK

Oil Industry of UK

Introduction

The world is experiencing the effects of the global recession and financial crisis. The debt crisis id Euro zone has also affected the interest rate and the credibility of many states. The deprecation of £ was also a major factor which impacted the industries in a negative way. When currency of a country depreciates, increase of cost of imports and exports become profitable. This also disturbs the balance of payment of the country. The cost of importing raw material becomes expensive; hence, this higher cost is passed on the consumers. Ultimately, the effect is trickled down in terms of exorbitant prices, thereby increasing the rate of inflation. This paper discusses the impact of financial crisis and macroeconomic policies on the oil industry of United Kingdom. The brief overview of the industry is presented followed by the analysis and, affect of the global economy crisis on the oil industry.

Discussion

The UK Industry Taskforce on Peak Oil and Energy Security, an alliance of eight companies of UK, has made a prediction on the looming energy crisis in the world. The Peak Oil group published a report in which it elaborated the effects of a severe lack of oil within five years (Millward, 2008, 1-3). The diminishing reserves are forcing the oil companies to cut down their production. The economy of UK is highly dependent on oil as a source of energy. In the current oil crisis, many analysts have recommended that the government reduce it dependence on oil supplies.

Mr Leggett, chairman of Peak oil group, quoted "Society has become oil-dependent to its rivets. What we are warning of is a peak in production beyond which will be a fall, potentially a rapid fall, and that will mean a global energy crisis ...