The Oil Prices and its Implication to the World Economy (Research Proposal Sample)

Student’s Name: Professor’s Name: Course: Date: Research proposal Research Title: The Oil Prices and its Implication to the World Economy Introduction Oil is a valuable Commodity that has revolutionized the daily lives of human beings. Further, the availability of oil influences both macro and micro performance of the economy since major decisions on trading, finance and lifestyle revolve around oil products. However, since the year 2003, the world market oil prices have steadily cascaded, thus, affecting the producing countries and instigating hoarding from oil cartels (Painter12). Hence, it is imperative to understand the surging oil prices situation and develop a better module such as shale oil for the future UK economic prosperity. Therefore, this research proposal aims at examining an in-depth analysis of the surging oil prices to the world market and its implication to the UK economy. Through an extensive literature review of OPEC reports, exploratory methodology, a quantitative data analysis, the paper will then provide a summary of findings. Justification of the Topic In the UK, oil companies have gone bankrupt and more than 2000 oil company employees have lost their jobs since the year 2014. Further, this has affected the GDP of European countries as well as oil producing nations. The cause of this pandemonium is the drop in Oil prices since the year 2014. Currently oil prices per barrel are trailing at 43 dollars and in some cases such as American Bench mark, the price is at 40 dollars. This is a significant drop from the initial price of about 90 dollars in the year 2013. As the residents of United Kingdom who are affected by the oil prices, it is vital that we recognize the circumstance. First, the surge in inflation is connected to the trade policies of nations. Evidently all consumable goods are currently double the prices as compared to a decade ago (Mufson 28). For example, the price of gasoline, natural gas, and basic social amenities have doubled their prices. All this is instigated by the surge in oil price that implicates a chain of consequence into the normal life of UK citizens. Further, this is the real life situation; hence, efforts must be made through research to address the cause of the oil prices so as to make UK Great again and the world a better place. Statement of the Problem Which strategies can be utilized by international bodies, entities, and oil producing nations to control the market and stabilize the price so as to restore the world economy? Further, should developing countries , which are mainly consumers of oil products developa more rigorous alternative source of energy like shale oil. Besides, can these alternative sources of energy provide a concrete solution to the surging oil price and positively restructure the oil market? Research Objectives * The fundamental objective of the research is to examine the contributing variables to the rise in oil prices and how it influences the economy. * The paper will also aim to analyze the economic relation between oil producing nations and consumer nations, specifically within UK so as to establish the influence of oil products in the coexistence. In this case, crucial economic variables such as level of inflation, interest rates, and monetary policies will be examined. * The paper will further explore the oil trading policies in the international market as defined by OPEC (Organization of PetroleumExporting Countries) and the role of an alternative energy source such as shale oil to USA economy. * Finally, the paper will aim at providing analytical findings to help in creating awareness and solve the future challenges of unsteady global oil prices. Literature Review Though an enormous amount of research reveals that oil price increases have a certaindepressingforce on real GDP growth, there is a sizable debate that exists regarding the stability and strength of the relation between GDP and oil prices. Remarkably, some analysts affirm that the estimation in linear relations between oil prices and several macroeconomic variables have surged to the fore in a much weaker way since the 1980s. Again, the evidence of a weakening impact of oil price changes on themacroeconomy in information since the 1980s has occurred with another change in the nature of oil price campaigns. Conversely, before 1981, several big oil movements were headed in the positive direction. However, since that time the prices of oil have gone in both directions, painting a picture of endogenous macro developments in oil prices. Towards the end of 1985, Saudi Arabia gave up on its role as the price setter. Equally important, prices went low dramatically early in 1986, and the volumes that were in demand recovered in slow degrees in the subsequent years especially those for Saudi oil. Again, the oil price decline of 1986 saw OPEC abandon the producer controlled pricing mechanism and be content with a more market-relatedmechanism of setting up the price.For several developing countries, the ever increasing oil prices in the past few years have made structural reforms in the domestic petroleum pricing systems a critical element of their macroeconomic structures.Of the major global commodity clubs,none of them proves to be enduring and active as the organization of petroleum exporting states,in spite of the high improbable odds.From the start,OPEC was faced with strong resistance from major oil concessionaries who had to control global trade and supplies. United States policymakers are studying about the country’s reliance on bought external sources of fuels since the Second World Warended. Accordingly, those issues have been coming to the fore since the 1970s a time duringwhich sects of highly increasing oil prices resulted in degradation, high inflation, and financial stagflation (Jahangir 64). On the other hand, today’s developments in the United States natural gas production and oil are altering the discussion concerning United States energy strengths and vulnerabilities. Remarkably, greater availability of domestic energy reserves is of great use in the country which has lowered the reliance on imported resources and diversified the economic trends in the industry. However, the practice of buying resources from other states comes with fresh liabilities. In any event, there has been an indication that some of the countries that provide new energy resources are today becoming less economically functional and weakereconomically to energy price regressions when one examines how changes in U.S. oil and natural gas production may impinge on individual state economies (Brown 43). Of the major global commodity clubs,none of them proves to be enduring and active as the organization of petroleum exporting states,inspite of the high improbable odds.From the start,OPEC was faced with strong resistance from major oil concessionaries who had to control global trade and supplies(Brown 43). However, during the month of March2003, the world witnessed a huge movement in the Saudi-Russian relationship with Abdullah’s visit to Moscow. It was by then the most revered visit to Russia by a high-profile visitor to Russia by a Saudi Arabia delegate. At that time, his visit came during the time critics were raising questions regarding Saudi Arabia’s centrality in the United States foreign policy and also at the time during which Washington was searching for a way in which to reduce its dependence on Saudi oil. However, when the U.S. fell intensively during the September 11 bombings and the change of regime in Iraq in 2003, it seemed as though the Saudi policy makers had started to search for friends elsewhere (Friedman). Nonetheless, Saudi Arabia, which pays homage to two of Islam’s holiest places, becamecautious in its attempt to come up with coherent ties with the formerly communist state, Russia (Friedman). News about the United States shale oil upsurge becoming a game-alternator has become popularafter the estimation that took place in November 2012.In 2012, there were some expectations by the Paris International Energy Agency (IEA) that the U.S. will bypass states like Russia to become the world’s oil manufacturer by two thousand twenty and then become self-reliant by 2030.To this end, while such rosy assumptions play well to the IEA’s audience, that is largely American, they do not stand up to scrutiny. Similarly, it is now evident that U.S. shale resources could at one point play some important duty in the non-OPEC supply prospects. Research Methodology The research will be conducted through an exploratory methodology that emphasizes the analysis of independent variables and their interconnection to distinctive functions in a topic. Further, the exploratory data analysis approach is utilized due to its imperative value levels and capacity to analyze statistical data. Hence, the methodology analyzes past recorded history on oil, the current situation and projected occurrences in the oil market. Therefore, the exploratory methodology is the most efficient in understandi...