The Power of Big Oil

G.Nomuunaa

In the intricate tapestry of global economics, the oil industry emerges as a formidable
force, influencing the destinies of nations and shaping geopolitical landscapes. After
engaging with PBS's documentary series "The Power of Big Oil," particularly its first
installment, I find myself unraveling the complex web of economic perspectives and
concepts that underlie the power dynamics within this influential industry. In this essay, I
will delve into the economic implications explored in the documentary, analyzing the
intricate relationships between nations, corporations, and the environment through a
microeconomic lens.

One fundamental principle in microeconomics is the interplay of supply and demand. Part
One of the documentary meticulously dissects the supply and demand dynamics of the oil
industry, highlighting the pivotal role played by multinational corporations in manipulating
these dynamics to their advantage. The ability to control vast reserves allows these
corporations to influence global oil prices, showcasing the profound impact they wield on
the market. The documentary provides a real-world illustration of how changes in supply,
influenced by the strategic decisions of major players, can ripple through the market,
affecting prices, and ultimately influencing economic outcomes.

The market structure is another microeconomic concept that comes to the forefront in the
analysis of the oil industry. The presence of a few dominant multinational corporations
suggests an oligopolistic market structure. These major players, as portrayed in the
documentary, have the power to shape market outcomes and influence the distribution of
economic power within the industry. Microeconomics offers insights into the behavior of
firms in oligopolistic markets, where strategic decision-making and mutual
interdependence among competitors play a crucial role.

Elasticity, a key concept in microeconomics, measures the responsiveness of quantity

demanded or supplied to changes in price. In the context of the oil industry, the
documentary may illustrate how changes in oil prices impact consumer behavior. The
concept of price elasticity of demand becomes crucial in understanding how fluctuations
in oil prices influence consumption patterns and shape the overall market dynamics. This
understanding is essential for corporations and governments alike as they navigate the
economic landscape shaped by the elasticity of oil demand.

Externalities, both positive and negative, are fundamental concepts in microeconomics.

Part One of the documentary addresses environmental externalities associated with the oil
industry. The negative impacts on the environment, such as pollution and resource
depletion, are external costs not fully borne by the oil companies but experienced by
society. Microeconomics provides a framework for analyzing and addressing these
externalities, possibly through the implementation of corrective policies that internalize
the social costs of environmental degradation.

Now, when considering whether "Big Oil" is inherently good or bad, my perspective leans
towards the negative. I see the industry as having negative long-term consequences,
aligning with the darker side revealed through environmental externalities. The
documentary showcases the significant role it plays in global economies, contributing to
technological advancements and improving living standards for many. However, from my
viewpoint, the temporary economic benefits generated by Big Oil may come at the cost of
more severe and lasting consequences in the future. The environmental impact, including
pollution and resource depletion, raises ethical concerns, challenging the industry's
sustainability in the face of growing environmental awareness.

In conclusion, "The Power of Big Oil" serves as a microeconomic case study, providing a
rich context to apply various concepts. From supply and demand dynamics to market
structures, elasticity, and considerations of externalities, microeconomics offers
analytical tools to understand and evaluate the economic intricacies within the oil
industry. The documentary not only informs about the functioning of the oil market but also
invites a deeper examination of the microeconomic forces at play. My critical perspective
on Big Oil underscores the delicate balance between economic prosperity and
environmental responsibility, highlighting the industry's potential for long-term negative
impacts on our planet.