The oil but­ter­fly!

The Kurdish Globe - - NEWS - Swara Kadir

soon it may be the Euro­pean and Chi­nese econ­omy that will be back on track.

The in­ter­est­ing point to know is that there doesn’t need to be a big change to cause a rise in the price of crude oil. A small shift in a na­tional mar­ket can cre­ate rip­ples that will af­fect the global mar­ket. This the­ory is com­monly called the but­ter­fly ef­fect. Ed­ward Lorentz the in­ven­tor of the the­ory states that a but­ter­fly flap­ping its wings in China can cre­ate storm sys­tems in places as far away as the United States, African or Europe! If a but­ter­fly can do that can a change in the mar­ket of one coun­try or na­tion change the global crude oil price? In global eco­nomics any­thing is pos­si­ble!

Could the above be true or is it just wish­ful think­ing? It might just as well be the case that crude oil prices con­tinue to fall and stay down in­stead of go up. What can Kur­dis­tan and other oil based economies do then? If one looks to the ex­am­ple of Saudi Ara­bia, which is pro­duc­ing at a rate of over nine mil­lion bar­rels a day, mak­ing it bound to de­plete it’s oil re­serves in two decades. It has al­ready started al­ter­na­tive means of gen­er­at­ing na­tional rev­enue. Ar­eas Saudi Ara­bia has been in­vest­ing in are the food in­dus­try, petro­chem­i­cals, and so­lar power gen­er­a­tion to name just a few.

In or­der for Kur­dis­tan and Iraq to have a sus­tain­able econ­omy it needs to invest in sec­tors of the econ­omy other than oil such as tourism and agri­cul­ture. This way it would be build­ing a more sound and sta­ble econ­omy that is not at the mercy of crude oil price fluc­tu­a­tions.

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