Oil boom
Encyclopedia
An oil boom is a boom
in the oil producing
sector of an economy. Generally, this short period initially brings economical benefits, in term of increased GDP growth
, but might later lead to a resource curse
.
theory, the sudden discovery of oil may cause a decline in the manufacturing sector. The consequences will vary from country to country, depending on the country's economic structure and stage of development. For example, after the oil boom in Gabon
, the country showed symptoms of the Dutch disease, while oil-producing Equatorial Guinea
did not.
Boom and bust
A credit boom-bust cycle is an episode characterized by a sustained increase in several economics indicators followed by a sharp and rapid contraction. Commonly the boom is driven by a rapid expansion of credit to the private sector accompanied with rising prices of commodities and stock market index...
in the oil producing
Petroleum industry
The petroleum industry includes the global processes of exploration, extraction, refining, transporting , and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline...
sector of an economy. Generally, this short period initially brings economical benefits, in term of increased GDP growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
, but might later lead to a resource curse
Resource curse
The resource curse refers to the paradox that countries and regions with an abundance of natural resources, specifically point-source non-renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with fewer natural resources...
.
Consequences
According to the Dutch diseaseDutch disease
In economics, the Dutch disease is a concept that purportedly explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector...
theory, the sudden discovery of oil may cause a decline in the manufacturing sector. The consequences will vary from country to country, depending on the country's economic structure and stage of development. For example, after the oil boom in Gabon
Gabon
Gabon , officially the Gabonese Republic is a state in west central Africa sharing borders with Equatorial Guinea to the northwest, Cameroon to the north, and with the Republic of the Congo curving around the east and south. The Gulf of Guinea, an arm of the Atlantic Ocean is to the west...
, the country showed symptoms of the Dutch disease, while oil-producing Equatorial Guinea
Equatorial Guinea
Equatorial Guinea, officially the Republic of Equatorial Guinea where the capital Malabo is situated.Annobón is the southernmost island of Equatorial Guinea and is situated just south of the equator. Bioko island is the northernmost point of Equatorial Guinea. Between the two islands and to the...
did not.
History
Some important oil booms around the world include:- Mexican oil boomMexican oil boomThe Mexican Oil Boom was an oil boom from 1977 to 1981 which eventually led to a disastrous crash that lasted for most the 1980s, driving the economy to a payment default and a big deficit correction as oil prices fell.- Pre Boom Period :...
(MexicoMexicoThe United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
, 1977-1981) - Pennsylvanian oil rushPennsylvanian oil rushThe Pennsylvanian oil rush was a "boom" in petroleum production which occurred in northwestern Pennsylvania from 1859 to about 1870. It was the first oil boom in the United States....
(United StatesUnited StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
, 1859) - Texas Oil BoomTexas Oil BoomThe Texas Oil Boom, sometimes called the Gusher Age, was a period of dramatic change and economic growth in U.S. state of Texas during the early 20th century that began with the discovery of a large petroleum reserve near Beaumont, Texas...
(United States, early 1900s-1940s) - Calgary oil boom (CanadaCanadaCanada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, 1947)