22+ Pros and Cons of Major Oil Production Cut (Explained)

The outbreak of coronavirus has affected literally everything in the world. While it arises some questions of huge debates regarding to what extent the lockdown to stop this COVID-19 infection spread has been a boon or a curse, it is obvious that it is all very situational and subjective. The effect of lockdown has turned out to be quite a complex circumstance. Due to this, how certain things are all getting topsy-turvy while, on the other hand, many aspects are looked in a quite positive light. To find a balance between these two sides of the same coin is therefore, hard.

One of the extreme decision made regarding the ongoing lockdown is the cutting down of oil production in majority. While, it certainly is a huge decision, there are certain points which lead to take this initiative. Let’s now see what are the pros and cons it have and how it impacts the people.

Pros of Oil Cut Production

  • Restriction

After all is said and done, restricting the production of oil makes things quite simple for the people out there. In a way, this was done to ensure that there is a strict control over the spread of the deadly coronavirus infection across the whole world.

  • Illegalities

In many cases, it is reported that individuals who are associated with the production of oil management are supplying oil to businesses and industries illegally in this time of nationwide lockdown. It is therefore a good decision to put an end to it.

  • Control

There are certain section of people who are misusing this rare crude oil for production or manufacturing purposes of items even under the strict declaration of keeping the industries closed under the government’s order. This helped to get a good control over these kind of extreme situations.

  • Budget

However unsatisfactory the condition might be, the price of oil has been increased due to this prevailing crisis of the production. This is actually working in favor of the country as people are unable to take harmful advantages of the rarity of this non-renewable source.

  • Adjustment

Government has considered many different elements before arriving to this complex and huge decision. It has been mentioned that this major oil cut production has been issued keeping in mind to match with the present situation of the financial sector.

  • Proration

It has been made crystal clear that the proration due to this will not affect a company’s economical development or shall not run out of business by any means or a person will not lose out on his job.

  • Quarantine

While the officials have successfully ensured that there are no eminent cases of misuse or illegal business, it is therefore able to achieve to make people not leave their homes and maintain a promising self-quarantined state. People are now secured into the safe zone of their houses against coronavirus.

  • Necessities

With the price of the oil being increased due to the restriction of oil production, the exception was made on the aspect of getting daily essentials such as groceries and other household items. The industries associated with these sectors are given discount in the oil prices so the support can conducted smoothly and without hassle. 

  • Stabilization

On an economical level, the markets which deals directly or indirectly with the usage of oil has been brought under considerable stabilization. Throughout the years, there had massive exploitation of this crude oil and the world was actually facing a crisis for this. This decision shall bring back the balance in nature to restore the oil production.

Cons of Oil Production Cut

  • Limitation

The first thing that comes to mind is how this cutting down of most of the oil production is going to affect the people who earn through this and the production of oil being their only source of income. Lockdown has certain made lives of millions of people hard and this is just another aspect of it. 

  • Demand

As a result of this oil production being strictly limited, it is quite obvious that as it is undoubtedly an essential aspect of everyday lives, there is hardly any question that the demand will be much more of it than usual even in this current state of the globe. 

  • Price

When the demand of a product of necessity rises but the production is restricted and moreover, when the product itself is very rare to find, automatically the price will start to sky-rocket. This is a bad news for the people whose lives are dependent on this kind of source.

  • Transportation

It is needless to say that it will obviously have a tremendous negative impact on the sector of transportation system. No doubt that a significant portion of a country’s economy thrives on vehicles which does not have other options than crude oil.

  • Manufacturing

When the transportation system operation collapses due to crude oil crisis, automatically the production as well as manufacturing of various goods and products will be cut down to the chase as to export or import these products require transporting vehicles.

  • Crisis

Already, due to the period of lockdown, businesses and other kinds of companies are all negatively afflicted. For this, more or else every industries are falling apart and there is a general crisis rampant everywhere. 

  • Economy

This pattern is almost like a chain system. When the downfall of most of the industries starts to happen, the economy will fall headlong on the river as there will almost few to none work rates.

  • People

Last but definitely not the least, beyond each and everything, people all across the world will be affected due to this either directly or indirectly. Individuals are associated with production of oil in a very intricate way so it will be drastic.

Although, there are certainly some points in both the cases of advantages and disadvantages which need to be carefully considered, the decision has been finalized due to the sole reason of saving the lives of humankind against the coronavirus spread. Everyone is aware that oil is an important factor but this choice was a mandatory one. 

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