Three of the top four oil exporters are countries in the Middle East, a region that has recently seen high levels of uncertainty after uprisings in Egypt, Libya, Syria and Tunisia. The result of these uprisings is yet to be seen, and their ramifications for global politics are unknown. From the perspective of the oil industry, instability means higher prices, which translates as high petrol costs for the consumer. The largest oil exporting nation is Russia, which faced political unrest during the recently held presidential elections. Whilst the UK does not import much of its oil from the nation, instability there could cause a rise in global oil prices.
Many oil exporters, particularly those in the Middle East, work together to set oil prices. OPEC, the Organisation of Petroleum Exporting Countries, was founded in 1960 as a means to guarantee a stable and fair price for oil. As of January 2011, there were 11 member countries. OPEC plays a major role in ensuring that a drop-off in production in one country does not affect the global oil price, as many of these countries are reliant on a stable price to keep their economy stable.
To an extent, the UK has been sheltered from many of the large rises in oil prices. Partially this has been because of its domestic oil sources, from the North Sea. Also, the UK does not get its oil from one supplier, meaning instability in one country can be offset by buying cheaper oil from other areas. With the discovery of oil in the area surrounding the Falkland Islands, Britain’s domestic oil looks set to be secure for the foreseeable future.
Whilst instabilities in the Middle East and North Africa show little signs of abating, the real rise in petrol at the pump is caused by rising duty on the use of oil. Governments across the world have funded green projects through the taxes on petrol, and this is why filling up a tank of petrol rises year on year. However, for the motorist, the range of options for car insurance and other associated costs may help to mitigate some of the rising petrol costs. Although global instability is set to continue, the UK has many structures in place to keep petrol prices relatively constant, meaning that, although driving a car may be expensive, the uprisings around the world will not make a major difference when it comes to the costs of driving.
The author of this article is a part of a digital marketing agency that works with brands like Admiral Group. The content contained in this article is for information purposes only and should not be used to make any financial decisions.
