The Effect of World Oil and Gas Crises on the Economic Condition of Oman Paper Example

Purpose:

The key purpose of undertaking this research study is to analyze and evaluate the effect of world oil and gas crises on the economic condition of Oman. The research study aim at examining the impact of rising and fall in the prices of oil and gas in the world on Oman's economy. The research examines factors and trends that cause changes in oil and gas prices at world level and its impact on prices of oil and gas in Oman for last five years.

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Research Methodology:

This research study makes use of varied tools and techniques of research methodology to ensure that information and data collected are relevant to the research topic. The research methodology techniques and tools used in this research study includes positivist research paradigm, descriptive research design, deductive research approach, qualitative methods, and secondary data. The collection of secondary data was done through the critical and in-depth analysis of different researchers' and scholar's finding in the research context in the most critical manner. Further, the collected data was analyzed through thematic data analysis methods for arriving at realistic and substantial results.

Findings:

The key findings derived from that analysis of data collected for the purpose of undertaking this research study implies that the economy of Oman is to a great extent dependent upon oil and gas sector. The occurrence of oil and gas crisis in the world had a severe impact on the overall economy of Oman. The decline in the prices of oil and gas at the global level could be seen in both non-oil and oil and gas segment. Oil and gas companies laid off workers in large numbers, and some oil and gas companies even winded up their business operations to minimize the adverse impact of oil and gas crisis. A steep decline was registered in the percentage of contribution of the oil and gas sector towards the GDP of Oman. The government reduced public spending and subsidies to manage fiscal deficits. Diversification of the economic and business activities to non-oil and gas sectors can support in maintaining a constant growth rate for the economic development of Oman.

Research Implications:

The research findings have significant implications for analyzing the factors that impact the prices of oil and gas and devising the strategies to minimize losses. In addition to this, the results obtained from this research will facilitate the diversification of economic activities and the overall development of Oman.

Limitations:

The use of secondary data collection method for the collection of research related data was a time-consuming process and creating a link between the qualitative and quantitative data was a difficult task.

Keywords:

Oman, Oil and Gas Sector, Macroeconomic Factors, Economic Development

Chapter 1: Introduction

1.1 Background Oil and gas industry

is considered the drivers of the world economy as they are the major commercial source of energy all over the world. The oil and gas along with their substitutes are incredibly essential and as dominated the energy sector for the past several decades. Oil and gas industry accounts to provide energy to nearly fifty percent of the total energy consumption in the entire world (Hamdi and Sbia, 2013). The oil and gas production has contributed significantly to the growth of the process of industrialization and globalization leading to the economic development of countries all over the world. Furthermore, with the advancement in the technology, and development of the transportation sector the significance of oil and gas continued to expand in the growth and development of the countries (Hamdi and Sbia, 2013). Oil and gas have become essential for performing the daily industrial operations as many other industries such as manufacturing are dependent upon it. In this context, the access to oil and gas and their prices have a transcending effect on the economic development of oil and gas producing countries, developed countries, and the developing countries (Hamdi and Sbia, 2013).

Oil and gas are natural resources that are found to be present on the ground across distant geographical locations. The Gulf and Arab countries are the major sources for exploration, production, and supply of oil and gas for the entire world. In this respect, the country, Oman is one of the major producers of oil and gas and is highly engaged in business deals of selling oil and gas to various companies located at distant geographical locations across the globe (Wilson, 2013). The oil and gas industry is the major source of revenue generation for Oman. Oil and gas prices often keep changing based on demand and supply for the same across the world. Moreover, the prices of oil and gas are largely controlled by the Organization of the Petroleum Exporting Countries (OPEC) countries (Wilson, 2013). In this respect, changes in the prices of oil and gas at international level have a direct and indirect impact on the economy of Oman as it is highly dependent on oil and gas industry.

The fall in the prices of oil and gas creates pressure for achieving consistent growth in Gross Domestic Product (GDP), maintaining current account balances, and managing fiscal of the Sultanate. In this respect, this research study discusses in detail about the effects of oil and gas crisis on the business prospects, residents, infrastructural development, maintaining adequate fiscal balance, and overall economic development of Oman. Furthermore, this research focuses on discussing that factors that affect movements in oil and gas prices, and price trends for oil and gas over last five years at international level for the better understanding of the topic and finding solutions in order to overcome the high dependency of Oman on oil and gas industry. In this relation, this research study focuses on analyzing the effect of world oil and gas crisis on the economy of Oman.

1.2 Research Aim & Objectives

Aim:

The main aim of this research study is to examine the effect of slash in oil and gas prices all over the world on the economy of Oman. In order to ensure successful accomplishment of the stated research aim, some research objectives have been framed. The research objectives are mentioned below:

Objectives:

• To evaluate and explain the changing trends in prices of oil and gas all over the world and Oman for last five years
• To identify the factors that impact the oil and gas prices and evaluate their impact on oil and gas prices
• To explain the ways in which changes in oil and gas prices at international level has led on the economy of Oman
• To provide recommendations to the government of Oman for minimising the impact declining oil and gas prices in World markets on Oman's economy

1.3 Research Question

An appropriate research question is designed based on the aim and objectives of the research study. The research question designed seeks to provide a specific direction for carrying out the research study. In this respect, the research question for can be stated as:

"To what extent has the occurrence of oil and gas crisis in the world has affected the economy of Oman?"

1.4 Research Significance

Oman plays a significant role in the oil and gas industry as it is one of the major source of oil and gas supply at a global level. The continuous decline in the oil and gas prices all over the world since the end of 2014 had a significant impact on the economy of Oman. Oil and gas sector is the major contributor to the GDP growth of Oman, contributing nearly 70 percent to the budget of the country. Observing the rise in the oil and gas prices during the period of 2010 to 2014 a high economic growth was noticed in Oman (Deutsche Welle, 2018). In this respect, changes in prices of oil and gas have a significant impact on the overall growth and development of the country. The rise in prices of oil and gas has the potential to offer stupendous economic growth and on the contrary fall in the prices of oil and gas can result in (Deutsche Welle, 2018). In this context, this research study attempts to examine the effect of changes in oil and gas prices across the world on oil and gas prices in Oman. The topic selected for undertaking this research study is highly significant as it will help in better understanding of the factors that causes movement in prices of oil and gas. The research will also enable to analyse the effect of changes in the price of oil and gas on the business in other sectors, residents, economic progress and overall development of Oman. The high fluctuations in the prices of oil and gas; and a high dependency of Oman on deri...