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Volume :5 Issue : 19 1979      Add To Cart                                                                    Download

“THE TRANSPORTATION OF THE GULF:AN AUSTRALIAN APPRAISAL”

Auther : By Dr. Rony Gabbay

 

The “Persian” Gulf came to world attention some six years ago when as a result of the Arab-Israeli War of October 1973, the oil-producing countries quadrupled the price of a barrel of oil from $2.30 to about $10.00. Very few people then foresaw the implications of such a move on the economy of the western countries, or on the economy of the oil-producing countries themselves. In Australia, the effects of the energy crisis were very mild (Australia produces two-third of its needs of oil), and consequently Australian involvement with the “Persian” Gulf has been very slow to develop. Indeed until very recently, many Australian businessmen have been skeptical as to the potentials of the Gulf markets. Some are even convinced that the oil wealth of these countries is a passing windfall that would disappear in a matter of a few years.

The article is set to identify the economic factors responsible for the rising importance of the “Persian” Gulf in world affairs. This importance is attributed to the quantities of proven oil reserves that the Persian Gulf holds; the quantity of oil it produces, the dependency of the Western World on that oil and the ever-increasing role of the Gulf countries in international trade and finance.

The magnitude and the durability of the oil wealth in the Gulf countries are then related to the future price and demand for oil. The challenge to oil could come from various directions, none of which is really detrimental to the supremacy of oil as a convenient energy source. Sophisticated sources of energy, such as solar energy, tidal energy or geothermal energy etc., could become available. But even the most optimistic proponent of these sources does not expect anyone of them to become commercially available before the turn of the century; the major obstacle being cost. Also there is the possibility for consumers to shift away from oil into other existing alternatives such as coal, natural gas and nuclear power. This could happen and will happen especially in well-appointed countries such as Australia, the United States and Europe. But, because of economic, technical, environmental and political considerations, these energy alternatives cannot replace oil altogether. Indeed the demand for oil would continue to grow at around 3 to 3.5% per annum (compared with a growth rate of 5 to 6% during the sixties).

Increasing demand for oil coupled with higher prices would generate enormous wealth for the Gulf countries, which would have a great impact on their development. Their priorities, as derived from their development plans, are evaluated, and a projection of their imports, by major commodity classifications is calculated. This shows a substantial increase in the import of agricultural produce and basic raw materials, from 8.9% of total imports in 1975-76 to 28.8% in 1985. It is in this context that Australia’s trade with the region is assessed. The conclusion is that the Gulf countries could well become Australia’s major trading partners by the mid-eighties.

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