UAE Dependence on natural gas and oil

United Arab Emirates ( UAE ) is graded 3rd largest economic system in the Middle East and encompasses seven assorted emirates. UAE economic system depends on natural gas and oil and globally it is ranked 7th in footings of these natural resources. UAE is one of the members of OPEC and is known to hold great influence on the organisation because of its dependability in the supply of oil and gas in the universe market. UAE has resorted to alternative beginning of energy to run into the increasing demands of energy in the state such as atomic and solar energy.

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2.0 Options to oil

The United Arab Emirates ( UAE ) has been undergoing rapid economic growing and this has prompted tremendous additions in the demand for electricity. It is estimated that by the twelvemonth 2020, UAE domestic demand for electricity will be more than twofold, ( Black and Flarend 59 ) . Faced with restraints on the sum and the rate at which the traditional energy resources such as natural gas, can be brought to the market in add-on to climate alteration, the UAE Government has come up with enterprises that intend to place alternate methods that will bring forth the much needed power to fuel its turning economic system.

2.1 Alternative Energy

Even though oil and gas is of import to the economic system of UAE, the state has focused its committednesss to developing an alternate energy. The aim of this project is to cut down C emanations and this has been achieved through major enterprises in Abu Dhabi and Dubai. Dubai has come up with environmental bluish print that guarantees growing and advancement while at the same clip protecting the devastation of the environment. The direction of the demand side of electricity will therefore play a important function, as will the increased public transits. The United Arab Emirates ( UAE ) is ranked 6th in the universe in footings of oil militias and fifth in footings gas militias ; this makes the state to be an of import spouse and of import provider in the universe energy markets.

The UAE is graded 3rd in the universe in footings of petroleum oil export ; nevertheless the state exports really small rough oil to the United States. Oil exports is regarded to be the pillar of the economic system, however it history for merely tierce of economic activity. This is because of the aggressive authorities policies that are designed to diversify the economic system of UAE. The UAE has initiated renewable energy and energy efficiency plans, ( Kelly 26 ) . In 2005, the UAE went in front to sign the Kyoto Protocol to the UN Convention sing Climate alteration, this made it to go among the first major oil-producing states to make that. Abu Dhabi, a member of the UAE is known to hold established a comprehensive clean energy enterprise that is extremely ranked in the universe.

2.2 Nuclear Energy

The United Arab Emirates ( UAE ) is in the procedure of get downing what is known as a peaceful, civilian atomic energy plan which advocates for the highest safety criterions, security, un explosive every bit good as operational transparence. The UAE has been forced to concentrate on atomic energy because of an one-year addition in domestic demand for electricity that clock 9 per centum. In add-on, by 2020 its UAE population is expected to be 6.6 million while demand for the electricity is expected to time 40,000 megawatts, ( Maczulak 87 ) . While coming up with its atomic energy policy, the UAE clearly expressed its peaceable aims. A policy papers that was introduced in 2008, described a series of committednesss that include the determination to worsen domestic enrichment and reprocessing of atomic fuel, which involves two parts of the atomic fuel rhythm that can be directed to non peaceable aims. To accomplish its atomic energy aim, the UAE invited other bureaus to work with which such as the International Atomic Energy Agency ( IAEA ) and other authoritiess which include the United States.

Involving IAEA in the atomic energy undertaking ensures peaceable applications of atomic energy, which is considered to be an of import facet that guarantees planetary energy security that has an impact on the economic development. In add-on, the IAEA plays an of import in developing human resources every bit good as in the exchange of experts and expertness in atomic applications, ( WAM 10 ) . The IAEA in a nutshell has contributed tremendously towards the development and enlargement in the application of peaceable atomic engineering every bit good as vouching atomic nonproliferation.

2.3 Solar energy

The United Arab Emirates ( UAE ) still has immense militias of oil and natural gas ; nevertheless it has programs to tap another of its abundant natural resources which is the year-around sunlight. The governments have identified the huge desert that is environing Abu Dhabi and have spread arrays of solar panels that are transforming the blaze Sun into energy. The undertaking has been dearly-won but the high gross earned from oil, effortlessly covers the cost. The solar power to be tapped from UAE will excel that of US and European states which will bring forth about 20 to 30 per cent of energy from renewable beginnings by 2020. The jutting end product in the UAE will be boosted by the handiness of abundant grosss coming from oil, trade, touristry and existent estate, ( National Research Council, 100 ) .

However, solar which is a renewable energy is faced with competition originating from the bing but extremely subsidised grid electricity for energy-intensive industries such as desalinization. This has forced the UAE to bridge the much wider spread created with short-run discounts. Experts globally have concurred that UAE is endowed with sunlight and infinite and these organize the important assets needed to develop solar power as a renewable energy. However, they caution that it should be developed in such a manner that it incorporates distant desert solar farm and rooftop installings on abodes and concerns that holistically contribute to general production of solar energy, ( Hazen 3 ) .

2.4 Coal energy

The UAE can beginning coal as an alternate energy beginning to oil. The detonation of building that is presently experienced in the UAE has created an tremendous demand for energy which can be reduced by importing of coal. In 2007, the UAE imported about 550, 000 metric tons of coal to supplement energy supply from other beginnings. Private sector in UAE, depends to a great extent on the handiness of electricity and hence the demand for the state to shut the bing energy spread.

3.0 The function and influence of the UAE within OPEC

Since 1974, the United Arab Emirates ( UAE ) has been a dependable and stable member state of the Organization of the Petroleum Exporting Countries ( OPEC ) . UAE relationship with OPEC has its pillars establishing on trust and common apprehension. Their relationship has ensured that the aims of OPEC and UAE, as a member state are furthered. From the point of position of OPEC, the function of UAE can be observed in multiplex positions. First and first, there is engagement of UAE in the activities of OPEC, ( Gupta 11 ) . The UAE has been able to give the OPEC organisation President for approximately 15 OPEC conferences. In 2007, Mohamed bin Dhaen Al Hamli who was Minister of Energy assumed the President function and this ended in December of that twelvemonth with a meeting held in Abu Dhabi which marked the 146th Extraordinary Meeting of the organisation & A ; acirc ; ˆ™s conference, counted to be the 4th conference to be held in the state.

Second, the UAE has played rather a important function towards helping OPEC in broadening its planetary base and late the organisation has leaned on the advancement of cooperation between manufacturers and consumers. During his term of office as the President of OPEC in 2007, Al Hamli maintained producer-consumer duologue. There were multiplex duologues and round tables under his leading and in the procedure transacted concern trades with states such as China, the European Union every bit good as the International Energy Agency on behalf of the OPEC. In add-on, the UAE has continued to be dependable in presenting unafraid supplies of oil to OPEC consumers and its current production degrees is estimated to be around 2.4 million barrels a twenty-four hours. At the minute, the Abu Dhabi National Oil Company is globally ranked among the taking planetary energy companies and has helped in providing the universe with oil and gas demands through geographic expedition, production, refinement and transit of these expensive natural resources at place and abroad. The UAE has ample militias of oil and gas and in the hereafter the state has the potency of going a major manufacturer of hydrocarbons. The UAE has significantly made input sing to the universe energy markets since the find of oil in the state in the fiftiess. The find of oil has facilitated the state to go modern and vibrant. The UAE is besides taking a lead among the OPEC member states in the development, commercialisation every bit good as deployment of clean energy solutions, more so through the Masdar enterprise, ( Davis 185 ) .

OPEC through UAE has recognized the importance of use of all the bing cost effectual clean energy engineerings which incorporate fossil fuels like C gaining control and storage. Thus the two, OPEC and the UAE place themselves with the common aim of keeping a house and healthy universe oil market. This in consequence warrants efficiency, economic and changeless bringing of crude oil to clients every bit good as steady income to manufacturers, therefore a just and speedy return on capital for investors in the crude oil industry. In looking into the past actions of OPEC, it becomes difficult to believe of the organisation or the international oil market sole of a strong and robust United Arab Emirates. This is because the state is dependable and a changeless provider of gas and oil to the planetary energy markets. Hence the function of UAE within OPEC has continued to be influential and prudent. The UAE has ne’er been tempted to use its influences forcefully within the organisation ever holding with the place taken by Saudi Arabia. This base is expected to go on merely because the UAE has achieved its aims through this line of action. The state applies cautiousness, affecting a wing diplomatic negotiations with ultimate purpose of forestalling the OPEC members from taking utmost action and besides uses pragmatism to guarantee that the state maintains its market portion every bit good as gross from exports.

3.1 Effect of quota cut by OPEC on planetary economic system

The Organization of Petroleum Exporting Countries ( OPEC ) is considered be a powerful group globally because of its huge influence in oil monetary values and production. OPEC has the authorization of commanding oil and gas monetary values through either by diminishing or increasing the production of oil. If the organisation decides to cut down its oil production, the monetary values will be pushed therefore obeying the jurisprudence of demand and supply in economic sciences. OPEC can take to cut down its available stock list through decelerating the rate of production or instead they can accomplish the same through seting the oil excess into militias.

On the other manus if OPEC decides to increase the sum of oil, it can inform its members to get down bring forthing more oil or instead direct their militias as stock list. Thus addition or lessening in the supply by the organisation can act upon indirectly the cost of oil in the universe market. In the procedure, if the sum of oil lessenings, so the monetary value of rough oil will non merely increase because of the available sum of oil. Hence, companies involved in refinement and selling the oil may acquire worried about the lessening in rough oil coming from the organisation. These companies in order to protect their net incomes from farther lessenings may be prompted to raise the monetary values of their merchandises, ( International Monetary Fund 45 ) . It is at that place rather obvious that lower oil monetary values have the consequence of exciting the economic system. Lower energy costs reinforce consumer assurance and increases their disbursement on lasting goods. Lower trade good costs lead to the betterment in the rate of economic recovery and complements financial and pecuniary policy attempts of a state.

Reflecting on the consequence of a quota cut by OPEC on economic recovery in the planetary economic system, am convinced to acknowledge that it will negatively impact it. Quota cut, entails decrease in the production of oil in this instance by the OPEC members. If OPEC introduces quota cut, this means that the sum of oil available in the market will be really much less prompting addition in the demand for the oil. Since the forces of demand and supply besides exist in the oil market, the lower the supply the higher the demand. The increased demand will force the monetary value of oil upwards, ( Gonz & A ; Atilde ; ?lez 61 ) . The planetary economic system depends on oil energy to convey about economic growing. Industries in the universe depend on oil to run their activities and if the oil monetary values addition, so will be the instance with the cost of production.

The increased cost of production will drive some industries out of concern as the cost of operation will be really high. Thus some companies will be forced to cut down their staff in order to keep their net income degrees. If the oil demand will go on to excel the supply, in the long tally many companies will shut down and this will do it difficult for planetary economic recovery. Thus the OPEC members need to be advised otherwise to shelf the thought of quota cut as it will non do things better but will decline the planetary economic system. However, if non OPEC states come in to make full the spread created by the OPEC it will ease the force per unit area on the oil monetary value in the market. The non OPEC states will hold to bring forth more than what is supplied by the OPEC states and this will cut down force per unit area on oil monetary values and increase economic recovery of the planetary economic system after recession, ( Schurr 123 ) .

4.0 Decision

In nutshell there is demand for UAE to come up with alternate beginning of energy to run into the increasing demand of energy in the state. However, the state has initiated assorted undertakings to complement the supply of energy from oil and these include solar and atomic energy plans. UAE, which is a member of OPEC has played important function towards accomplishing the ends of the organisation. The OPEC determination to cut quota will impact greatly on the planetary economic recovery after recession as it will force the oil monetary values up coercing concerns and industries in the universe to close down because of increased cost of production coupled with really low net incomes.


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