The Impact Of Globalization On World Oil Prices: An Economy Study

Since 1970s, the world has witnessed several dramatic fluctuations of oil prices, which resulted in many conspicuous political and economic problems in many countries. Under the economic globalization in the 21st century, the world oil prices experienced historical significant changes.From a micro-economic perspective, the tremendous changes of oil prices directly influenced customers' confidence and investment decision-making. As a kind of fundamental industrial raw material, the prices of end products derived from oil as well as related substitutable energy resources. Meanwhile, significant changes of oil prices may mislead strategic judgments on investment and bring huge impact on industrial economy. From a macro-economic perspective, such significant price changes will affect the economic development of many counties. According to figures from the Organization for Economic Co-operation and Development ("OECD"), every increase of USD10 dollars of oil price will cause decrease of the world economy by 0.25%, of the developed countries by 0.2% and of the developing counties by 0.7%. Therefore, fluctuation of oil prices may bring heavy burdens to the economy of many counties.The reasons for oil prices fluctuation include both short-term and long-term attributes. There have been many discussions on these reasons. However, study on impact of globalization of oil price changes is not sufficient.This thesis introduced the historical oil price changes since 1900s under the globalization process as well as its influences, and analyzed the short-term and long-term reasons for such changes based on the study on nature and stability of oil pricing system. Impact of globalization is quantified by the gray connection model, which introduces quantifiable attributes of oil price changes for comparison analysis and calculates the impact extent of each attribute, including globalization. Through the above study, this thesis provides some suggestions for China's oil safety strategy under the background of globalization.