OIL! The magical three letter that so much of our life depends on. Oil touches modern Americans in nearly everything they use and do in daily life. Whether it is the oil used in plastics, oil used to fuel their cars and homes, or the oil used to produce and transport nearly all goods and services imaginable, oil has a tangible effect on all of us. When I think of oil, I think of the Middle East as most Americans probably do. That is why a recent discovery of oil in Africa of all places is blog-worthy. With gas prices expected to reach record highs this summer it goes without saying that a discovery of oil is positive news, however, could the recent discovery of oil in Kenya really have any effect on American consumers?
For the first time in history what seem to be significant oil reserves have been discovered in Kenya, Africa. In their first exploratory drilling in Kenya, the company Tullow Oil discovered crude oil. Lately the company has focused its exploratory efforts in a block of Eastern African countries. Kenya, and other East African countries such as Uganda, Tanzania, and Mozambique have recently become a hotbed for exploratory drilling for not only oil, but also natural gas. While the findings are very preliminary, there is widespread optimism that these findings could materialize into something great, causing the companies stock to soar 6.59% on the exchange in London on March 26, 2012, the day of the announcement. Moving forward more exploratory wells will have to be drilled by Tullow Oil to further explore the question of whether or not large oil reserves exist that are worth gearing up production for. Although the first drilling was very successful, further successful wells will need to be found to make Kenya a profitable territory for the company.
But what does this mean for the American consumer? Many would think that such a finding would indicate an increase in the supply of oil, therefore lowering the price of gasoline (basic economics, if supply increases then price decreases). Reality, however, is mixed. In the short term speculation and excitement of the findings may push the market into lower prices, temporarily decreasing gas prices, but only a few cents and for only a few days. This is because the average time that it takes from discovery in initial drillings to getting that oil on the market takes anywhere from 3-10 years. Long-term, however, this could be the beginning signs of a new source of not only energy in the world, but power as well. If these initial drillings culminate into a large source of oil it would not only mean that Americans will have a new source of oil to fuel their lives to help alleviate rising demand for years to come, but also Kenya will become a major power in Africa and the world.
To really understand what this means for America and her consumers will take time. Further drilling will better tell whether or not Kenya, and even Africa together as a continent, will be thrust onto the world’s energy stage for years to come.
Financially Stephen grew up in a family that preached saving and living below your means. That, in part, translated to his interest in Economics, especially how economics can affect individuals’ financial lives. Through his financial markets class in the fall of 2011, he furthered this interest by analyzing macroeconomic events. Stephen believes that finance, personal finance in particular, is a subject severely left out when it comes to public schooling in this country, and it is a problem that has manifested itself and contributed to many of the problems seen today. He also believes that education is the key to improvement and hopes that through his writings he will be able help people learn about finance, macroeconomics, and how to be financially savvy for the future.
In his free time Stephen enjoys playing and watching sports, wakeboarding, sailing, and country music. At UNC he has participated in Strive for College, UNC Dance Marathon, and UNC Relay for Life.
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