Strategy Would Raise Significant Monetary Term Paper

Length: 5 pages Subject: Energy Type: Term Paper Paper: #37594432 Related Topics: Monetary Policy, Corporate Level Strategies, Corporate Strategy, Middle Eastern
Excerpt from Term Paper :

Furthermore, such a measure would cause alienation from major oil corporations as well as countries capable of oil refining. For Middle Eastern countries this is especially damaging, because during the 1980s, countries such as Saudi Arabia had just started a cycle of strong borrowing to develop their oil refining infrastructure. By decreasing the profit from refineries, OPEC nations that developing these capabilities will lose much more money than their initial investments, which would cause them to sink into either a financial crisis or default on loans from the World Bank and the United States. Although in the short-term these measures would help domestic producers, refiners, etc. It is not a measure that will have any sustainable benefit, because overall this policy could not last more than a year because of international pressure. Also, since U.S. domestic oil production is severely limited in that it could not possibly supply the entire country, the benefit for them would be minimal compared to the sustained damage such a policy would perpetuate if actually carried out. The end result of such a policy would be that domestic producers would see a boost in their sales temporarily, which would encourage them to increase production, refinery, etc. However, when the inevitable backlash from foreign interests occurs, the United States will be forced to remove both tariffs, causing domestic interests to actually lose money because they will have anticipated the positive affects of the tariff to last. As a result, the long-term damage will be both to the United State's reputation as well as the financial sustainability of domestic oil companies.

Foreign suppliers of crude oil and refined products will see such an action from the United States as extremely hypocritical. When OPEC decided in the 1970s to decrease their production of oil in order to increase the price of crude so that they can retain the long-term benefits of their new found natural...


The U.S. called such action blatant protectionism, and something that would decrease the overall good will and economic welfare of the world economy. For the U.S. To levy a tax on crude in order to benefit domestic industry as well as raise money for the government would be to act against its own stated international stance on protectionism. If this occurred, it would completely erode any trust established by the United States by foreign oil interests. It would cause undue tension between the two parties who are trying to create a harmonious relationship. Since the U.S. is the world's largest oil consumer by far during the 1980s, the impact of such a tariff on the world stage will be profound. Foreign interests will react very negatively by using its own "oil weapon" in order to punish the United States for its blatant protectionism. Such actions may involve embargos against the United States similar the oil embargo of Carter's era, as well as progressive policies that would make it much more difficult for U.S. corporations to penetrate Middle East and South American oil supplies.

If such price control was to be put into play within the world stage, the United States would in the short-term experience higher prices for heating oil and gasoline than Rotterdam for several reasons. First, the United States domestic market would be paying for not only the market level of crude and refined oil, but also for the levied taxes. Second, the overall production of oil would temporary increase in order to shore up the economic downfall from the money that OPEC and other oil producing nations were hoping to make from excess production. Rotterdam would then reap the benefits in the short-term from hyper-escalated production of oil that would drive down the price of oil, but also from the fact that they suffer from no such tariffs within Europe. However, in the long-term because of the above stated concerns, the crude price as well refinery price will increase. For Rotterdam this means that overall they will not be making as much through their refinery thus they will inevitably have to raise prices to match. Regardless however, they should be less expensive than traditional venues.

Cite this Document:

"Strategy Would Raise Significant Monetary" (2007, February 09) Retrieved October 17, 2021, from

"Strategy Would Raise Significant Monetary" 09 February 2007. Web.17 October. 2021. <>

"Strategy Would Raise Significant Monetary", 09 February 2007, Accessed.17 October. 2021,

Related Documents
Fiscal and Monetary Policy and Economic Fluctuations
Words: 1049 Length: 3 Pages Topic: Economics Paper #: 10263461

Fiscal and Monetary Policy and Economic Fluctuations The global economy was relatively doing fine more than five years ago before it was hit by economic downturn or recession. During this period, the American economy was at its peak, particularly in the fourth quarter of 2007. However, this was followed by a mild recession at the beginning of 2008, which eventually turned into a severe credit crisis across the world approximately one

Fiscal and Monetary Issues in America Economics
Words: 2730 Length: 8 Pages Topic: Economics Paper #: 73454786

Fiscal and Monetary Issues in America Economics There are high tensions in the American economy today resulting from speculations whether the government will be able to hit the debt ceiling. Failure to hit the debt ceiling has serious economic effects to many sectors of the economy both in the United States and various countries of the world. Political disagreements regarding the budget delay decision-making process as the date ceiling draws closer

Global Financial Strategy
Words: 3324 Length: 10 Pages Topic: Business - Management Paper #: 83072330

Global Financial Strategy Critical assessment of the proposal to raise capital locally rather than in the UK In the analysis of the proposal of raising capital locally rather than in the UK, it is essential to consider four critical aspects: costs, risks, benefits/advantages, and limitations/disadvantages. In the presentation of this critical assessment, the focus will be on the four factors or aspect in order to offer reliable analysis of the situation. Costs In the

Management Strategies the History of Apple Corporation
Words: 1607 Length: 5 Pages Topic: Business - Management Paper #: 30336085

Management Strategies The History of Apple Corporation Strategy Development and Implementation The History of Apple Corporation The corporation has an exciting history, as it has transformed to the biggest and most successful technology firms in the world, under the best managers of time. Both the employees of the firm, the management and the product consumers have been linked to the firm's success. The firm was started with the two Steves, who from their early

Asian Monetary Fund - What
Words: 4024 Length: 10 Pages Topic: History - Asian Paper #: 77266012

The contributions of U.S. In these cases were only U.S.$5 billion to South Korea, U.S.$3 billion to Indonesia and zero to Thailand. (Examining the case for an Asian Monetary Fund) Alternatively, the East Asian economies like Japan and Singapore entailed bilateral assistance to the crisis hit regional economies in some other forms. Secondly, the East Asian crisis appeared to have accorded due emphasis on prevalence of 'demand' by dominating regional

Marketing Strategies - Breakfast Cereal
Words: 3102 Length: 10 Pages Topic: Business - Advertising Paper #: 33803914

Partial cost recovery. This is an objective that might have interest for an organization that has other revenue sources. Maximize quantity. The objective seeks to maximize the quantity of products/services sold or the number of customers in order to reduce costs in the long-term as predicted by the learning curve, also known as the experience curve. Quality leadership. Use price as a tool to designate high quality and position the product as