Oil And Gas
The economy is affected by many factors that determine if it is strong or weak.

These factors have to do with buyers consuming goods and services and at what
rate they do this. Do the goods and services that are consumed by people created
wealth, jobs and a better overall economy for a country. Throughout history some
economies have evolved faster and stronger than others. Policies that the
government places on industry, technology and the environment can all affect the
prosperity of an economy. Of the factors that affect economic growth the
industry of Oil and gas is one that holds a stronghold in the world\'s and

America\'s economy today. When evaluating the economic growth factor of economy
and specifically oil and gas on must consider the following questions: ¨ What
relationship does the factor have with the whole economy? ¨ How does this
factor affect economic growth ¨ Is the factor a cause or effect of economic
growth? ¨ what would the economy be like if there were significant problems
with this factor? ¨ What relation does a central bank have to this factor? I
will answer each of these questions in respect to how economy is affected by oil
and gas. The economy in the United States today is greatly affected by oil and
gas. When there are large reserves and an increase of active drills in respect
to oil, the economy seems to receive a boost. This is because prices for such
things like gas and oil fall and people are able to consume more gas at a lower
price. There is more supply and prices fall, therefore people save money on gas
and can consume other items in the economy. People working in these industries
have more job openings and more jobs filled, therefore creating a lower
unemployment rate and a higher national per capita income. The need for
substitutes are not there so, consumers will consume oil and gas at a growing
rate. Since, people use oil and gas for so many different things like heating
there homes, driving their cars, and a variety of other sources, the overall GNP
for the consumer will rise. Economic growth is affected through significant
fluctuations in inflation of oil and gas. If you look throughout history when
there have been fluctuations in gas and oil prices you have vast fluctuations in
the economy of our country. The instability of this factor has cause government
regulation to come into play in times of crisis. For example during the
mid-seventies we had the oil and gas shortage due to the Middle East cutting off
supply to Importers of their oil. By doing this, they caused a shortage in a lot
of countries creating rising oil prices and high demand. Consumers could not
rely on the oil prices to be stable, therefore they consumed less of other
products due to the inflation of gas prices and more of their dollar began to be
spent on gas. Americans particularly started to come up with more efficient
means of using and consuming gas over the past 25 years. Oil and gas is a
resource that can be used up if not conserved properly. That is why OPEC was
formed, as well as organizations such as NAFTA to help regulate trade of these
commodities and bring organization to a disorganized status. In addition,
governments like the United States impose taxes on gas to regulated the prices
in order to ward off against supplies of oil affecting the nations economy. This
only works to an extent, in the early to mid-eighties one state\'s economy lived
and died by the supply of oil. That state was Texas. When Texas\'s oil rigs began
to dry up, their economy went into a recession. Their reliance on the oil supply
as their main revenue producer caused a lot of people to lose their jobs and
demand and consumption for other products fell as well. This caused a spiraling
effect which caused people from all industries to lose their jobs. Texas\'s
economy suffered and so did parts of the American economy with High inflation
and high debt which caused the economy to suffer. Increased regulation and
diversification of a country\'s resources can stop this from being the case.

Countries representing OPEC all live and die by the constant production of oil.

While this factor is used to stimulate their countries economic growth, it
should be used to stimulate the building of a country\'s infrastructure. Oil-rich
countries should use the positive affect oil has had on their countries to build
strong governments and consumer demand for other