Impact of the Looming Oil Crisis on Global Trade

Every day businesses as well as individuals take the availability of oil for granted. However, the reality is that the threat of a global oil crisis is such that at any time the price of oil could increase to such a level that it would become too expensive for the average person to afford.
Increases in oil prices have been put in place in an attempt to slow the consumption of our natural oil resources and protect the global oil supply. However, research has shown that despite these measures and the global risk of recession, approximately 89 million barrels of oil are required daily across the globe. Experts have predicted that if the economy recovers from the current recession in the next 2 years then this figure would rise to 95 million.
An oil crisis in 1973 - similar to what could hit at any stage - saw the price of oil jump by 300% almost immediately and caused widespread oil shortages, with many petrol stations closing. Businesses minimised the usage of electricity, and some towns even banned the use of Christmas lights in an effort to conserve energy.
Should a similar crisis hit the world today, the impact on businesses across the world would be massive. In many countries businesses are being forced to reduce their energy consumption in an attempt to protect the environment, but if oil prices were to increase as the result of a shortage then the goal of saving energy would become an essential factor in the survival of the business. Put simply, most businesses would not be able to make any profit if they continued their current energy consumption.
Should the oil crisis hit, businesses will be left with some incredibly difficult decisions. A reduction in energy consumption would be the obvious course of action, and this could be partially achieved by making small changes such as switching off equipment when not in use. Small changes like these are unlikely to make a significant enough impact on energy bills though, so decisions may need to be made such as moving the business to a smaller premises with lower energy costs, or even reducing the trading hours of the business to reduce energy consumption at times when the business is not as profitable. This could lead to a vast reduction in the number of 24 hour retailers.
However, if the cost of energy rises at the same rate as during the 1973 oil crisis, simply reducing energy consumption will not be enough for a lot of small businesses; they will need to reduce other overheads to balance out the increase in energy costs. There are a number of ways in which this could be achieved, but the most likely scenarios are to reduce production costs, for example using cheaper materials, and reducing staffing costs, which will have an impact on unemployment levels.
There is much debate over the possibility of another oil crisis, but many businesses are already taking small steps towards reducing energy costs so that if a crisis does hit, it will not have such a drastic impact on the business' daily routines.

DG Cuthbert is a University educated UK native who specialises in writing unique, grammatically perfect articles for clients' websites.

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