Since the early 1970s, the world has witnessed fluctuating oil and gas prices with deceleration in estimated growth and production. Multiple studies have reported how economic cycles are coupled with this phenomenon and how it has influenced the world economy.
This paper provides an in-depth investigation of the various reforms and corrective measures taken by Petroleum Sensitive Countries (PSC), particularly, the United States of America, Saudi Arabia, United Arab Emirates, Russia, China, Malaysia and Indonesia. Multiple qualitative assessment of the reforms has been performed in addition to defining and assigning impact factors for their significance and probability of success. The cited reforms were, primarily, imposed to tackle the various complications resulted from low oil prices and was assumed to readjust and sustain the economy along with assisting these countries through the evident economic crunch and budget deficits with minimal damage. These highlighted reforms are analysed in depth which is followed by performing multiple comparative qualitative risk/opportunity assessments where weights have been assigned for each of the impact along with the probability of success for each type of reform.
It is found that the most common and effective reform that has been implemented by these PSCs is maneuvering with the energy prices in these countries along with production manipulation. In other words, revising energy prices and abolishing fuel subsidies for the end users, imposing taxes on commodities and limiting the total production output. From this study, it is also found that the energy prices adjustments and subsidies removal reforms has been identified as the most efficient governmental reforms fostering long term sustainability and profitability. This provides the PSCs with more opportunities to decouple their dependency on oil resources alone. Furthermore, other reforms taken by PSCs are analyzed, evaluated and compared to their respective short and long-term efficiencies followed by identifying optimum strategic reforms using multiple qualitative and comparative criterions. Reforms by Russia have also been analyzed in depth along with investigating their proposed strategies and its implementation to rescue its struggling economy under the new global energy game. Analyses of potential risks surrounding reforms of specific PSCs and discussion of the underlying consequences is discussed in detail in this paper.
This paper emphasizes on the necessity, the impact and the probable success in implementing energy pricing reforms in Petroleum Sensitive Countries should a similar situation arise in the future. This novel study which is coupled with extensive investigation and qualitative risk/opportunity assessment summary may act as a benchmark for future studies.
