Do Oil Discoveries Cause Conflict?

The conspiracy theorists will surely agree that oil and conflict is closely correlated – but do the statistics back it up? Economists have attempted to quantitative describe the relationship between discoveries of large oil fields and the probability of conflict.

war

 

Dube and Vargas studied this effect in Colombia and found that due to the concentration of oil profits being with the owners, extortion and kidnapping for ransom increased accordingly. This was described as a rapacity effect where it was in fact the money, not the oil that attracted conflicts.

colombia

Micheals found after conducting a worldwide regression that oil that it is actually the opposite –the increased wealth and opportunities from building the oil refinery actually decreased crime, as the potential criminals were less economically incentivized to commit crimes. The assumption that oil causes conflict stems from the anomaly that conflicts that arise due to suspected oil reserves rather than actual ones.

money

So in fact the building of oil drills and refineries can be beneficial to the surrounding areas, and the assumption they hurt an area was suggested to be untrue.

Shanghai Metal manufactures Salvage tools for oil drilling similar to those mentioned. To find out more, please visit our websiteLinkedInTwitter, Facebook and Instagram. Or you could try our new mobile app by scanning our QR code.

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Sources: Dube and Vargas’s Papers, Micheals et al’s paper

Siobhan R.// SMC Editor

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