A short opinion from metropolis opinionBlind Fluctuate on oil price has been striking third countries very hard, especially Net Importers from Third Countries (Poor Countries or Developing Countries).

As we know oil is unlimited resources so in front, someday oil supply decline and people will find someone else to replace oil. Many inventions had been done; for example electric auto car, sun-power auto car, nuclear for electric and more. But so far, those new inventions have been proven well but those things are too expensive and seem quite familiar to us. Nuclear is last alternative to replace our oil problems. While nuclear is very cheap; nuclear is very dangerous and must taken careful. So far; nuclear has been installed in rich countries, such as Japan, America, Russia, and Europe.

Newer invention has raised, oil can be replace with plant-oil (I don’t the phrase). The invention had been people replacing their land for food to land for oil. Many farmers have been replacing their land for food to land for oil, because of business. So the impact is food production had run low in recent days. In third countries (poor countries), which have agriculture as their main sectors, in the past is net exporters replace to net importers food.

Finally, in short opinion, to handle oil supply problem in future, plant-oil is good news for us, but we need millions hectares of our land to solve our electric needs, so we reduce our land for food. While the farmers look this as phenomena and good business prospect, food production had been running low. We are hunger now!

While food supply is running low, the price will be higher because of demand is stagnant even upper.
To explain my stupid opinion, let us see the graph below for more understand:

Demand Land for Food decreases because Demand Land for Oil increases

If early demand (allocation) land for oil is Oi and demand oil for Food is Fi, the line C shows number of land (m2). When demand (allocation) oil for land for oil increases, the impact is demand (allocation) land for food will increase. Proportion allocation then move from A to B. Point A shows total productions of both land demand for oil and food. If new equilibrium runs to point B, it means total production food decrease from Fi to Fj

Simple analysis; land for food is decreasing, total production also decreases and supply down while demand is constant (even higher), supply-demand law will work well in here, price for food will increase.

Oil Supply is running low, We must to think about it!

China’s resurrection has been establishing since ten years ago. Now, China woke up as a new wild tiger and tries to eat all his victims. China followed his neighbor Japan; imitate Japan strategies to be Modern Country, Top industry and Asia Leader in Economic, Asia Tigers.

Now, China’s products have been spread to all countries; America, Japan, European, Asia and Indonesia. The China Resurrection made all rich countries scare because China’s products are very competitive in pricing.

Besides making industrial countries scare, Rich Countries look China as a potential investment field. Japan has been changing his face to China. Japan declined his Investment in East Asia (ASEAN) and increases his money in China.

While many new industries move to China, demand on oil also increases. Without investment (foreign direct investment in china), demand on oil is still high because China has two billions people.

For illustration, if one man need 5 liters oil in 1 month, it means China need 10 billion liters, America (with 400 million citizens) need 2 billion liters, India (with 500 million citizens) need 25 billion liter. We see that china demand on oil is highest.

China is net importer on oil. When Supply or external factors disturb the price, oil price becomes uncontrolled. If China declines his quota, will harm his industries and the result is higher on his products.

So when Oil price runs to $120 USD per barrel to day, China still needs oil and no indicate to decline his demand. This is why Oil Price still high and Producers (OPEC and Exporters) continue to set the price high. OPEC and Exporters haven’t indicated increase supply because the current supply is enough to world demand. While OPEC and Exporters take profit on this condition, they have no opinion to increase their supply because they scare. If they increase their supply, and external factors (weak of dollar, sabotage in Nigeria) go to stabilize, oil price will decrease, because Oil Price run high isn’t caused by Oil Supply.

When we (producers) are in this condition; I think we don’t want to decrease the oil price, right! But if we still hold in high price; in long run we also get the impact. We get surplus on oil trade but we loss in non-oil products, and in the long run, the global economic goes worst and it is too danger.

While rich countries have external power and have more PPP (Purchasing Power Parity), How about Poor Countries? High in Oil Price has makes their government worried about their budget. Hunger and Demonstration and the worst are turbulence, war.

High on World Demand on oil, plus limited supply make us worried about our future. Rich Countries have many ideas to solve this case. They are not stupid. Rich countries like America, Russia, and European Countries start to increase their stocks. Another alternative is try to find new technology to replace oil with something else and so far the programs are work and show good indication.