Our dependence on oil means that new discoveries can lead to huge wealth. Much of the oil reserves are found in LEDCs. But compared to LEDCs with more diverse economies, the countries that rely on selling oil have higher levels of poverty. Six of the world’s oil-dependent states are classified by the World Bank as highly indebted poor countries. Roll over the icons to find out why.

Transnational corporations have the infrastructure to drill, transport and refine the oil in poorer countries. By getting a license to extract the oil, transnational corporations can make enormous profits.

for a table of the 15 transnational corporations with the largest revenues.

How many corporations involved in oil can you identify?
How many of the other corporations depend on oil in some way?

The rise of OPEC

©Sipa Press/Rex In the past, much of the oil industry and the prices paid for oil were controlled by a handful of companies. But in 1960, a new organisation was formed by a group of LEDCs that relied heavily on selling oil. This was called the ‘Organisation of Petroleum Exporting Countries’, or OPEC for short. OPEC members work together to control the amount of oil pumped into the world marketplace by agreeing supply quotas of oil. This way, they aim to keep oil prices stable, to guarantee themselves a steady income. For more on oil and its effects on development, visit: http://news.bbc.co.uk/1/hi/business/3020185.stm

for a timeline of key moments in OPEC’s history.

The Price of Oil

Countries that have no oil of their own face problems when prices rise, especially poorer countries.
for some statements, and decide whether they describe an effect of oil price rises on rich or poor countries. Drag them into the correct column on the table.