Nowadays, petroleum plays a very crucial role in the advanced countries in providing a cheap source of energy. In fact, the economy of these countries is based on oil. The use of oil is very extensive. It is not only used for the generation of electricity but also for running industrial machines. It is also used for air conditioning and transport. In European countries, the consumption of oil for driving private cars etc. is the highest. Shah Reza Pehlavi, the former king of Iran, had pointed out that a small European country like Holland consumed much more petrol than India.

The utilization of a natural resource like oil as a political weapon by oil- producing Arab countries met with stiff opposition from western countries the western countries criticized this action of the Arab countries as high) Unjust. The Arab countries justified their action by pointing out that ever) country had a right to determine the prices of its products. They said that Arab countries were not the only countries to increase the price of its products Even America had increased the price of wheat by four times during 1970 to 1974.

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The underlying objective of oil-producing countries was to put economy pressure only on countries like the U.S.A., U.K., France, Japan, German, and Holland etc. which had been supporting Israel. However, the price hike affected even countries like India which had never supported Israel and had always been on friendly terms with Arab countries. Thus, the oil crisis precipitated Arab countries hit not only the foes but also the friends.

The hike in prices of oil in 1974 by oil-producing Arab countries was a conceived move. It proved counter-productive. It impelled many countries the world to develop their own sources of energy and become self-sufficient oil these countries stepped up efforts to explore oil in their own countries as to reduce dependence on Arab countries. They also promoted research develop alternative sources of energy like solar energy, nuclear energy, by gas energy, etc. to solve this crisis.

The world’s oil reserves are three times bigger than what some popup estimates state, and peak global oil production is still about a quarter-centi away. The remaining oil resource base is about 3.74 trillion barrels, according to a report released on 14-11 -2006 by Cambridge Energy Research Associate That’s more than three times the 1.2 trillion barrels that “peak oil” theory suggest.

A new study says the world’s oil reserves are much larger than soil estimates; what the report shows, in trillions of barrels. World’s total reserve is 4.82 trillion barrels; from conventional sources-0.76 trillion bam already consumed-1.08 trillion barrels, from unconventional sources-1.91 trill: barrels, yet to be discovered-1.07 trillion barrels.

These efforts have borne fruit. Towards the end of the last century wool situation had improved considerably. The prices of oil which in 1974 gone up to 30 dollars a barrel slumped to 20 dollars a barrel in later years.

Though all countries have been trying their best to reduce the dependency for oil on the Arab countries, during the Gulf War, when oil price went up to 40 dollars a barrel, they were caught on the wrong foot and has pay a high price in order to run their industries.

But this crisis has warned countries which are heavily dependent for oil on Arab countries, to expel their own natural resources so as to become self-sufficient in this spas Crude oil fell to the lowest in more than three years on signs the US, world’s largest energy consumer, may be in the longest slump since War 11. Cede oil for January 2009 delivery dropped as much as $ 1.92, or 3.S to $47.36 a barrel in electronic trading on the New York Mercantile Exchan That’s the lowest since May 20, 2005. Brent crude oil for January settlem tell as much as $1.95, or 4.1 %, to $46.02 a barrel on London’s ICE Futu urope exchange, the lowest intraday Prince since Feb. 18, 2005.