Qatar economy overview – Term Paper

According to the JPT article, the latest price for Brent as of April 2014 was USD 107.76, while that of WTI was USD 102.07. It, therefore, indicates a slight increase in the crude oil prices as compared to that registered back in 2013 as of the month of December. These slight differences could have been contributed by the changes in the supply of energy, yet the demand is overwhelmingly high. It, therefore, becomes a challenge to satisfy the needs of all nations that demand oil yet the producing nations cannot produce a capacity to satisfy all the nations adequately. It is to this effect that most countries in the Middle East region are venturing in innovation and technology advancement to produce better oil quality and quantity.

Qatar source of income

Petroleum is one of the highest demanded fuel in the world. Countries that produce fuels, which include petroleum, are said to be among the richest nations in the world. Because the demand for fuels is high while the supply is low, this makes the prices of oil to undergo several fluctuations depending on its demand annually. Middle East countries are well known for their prominence in oil production. However, to be a lead producer of oil, countries need to invest in research, innovation as well its technological expertise. Besides this, knowledge in fuel production also plays a significant role to be successful in the industry. 

Petroleum economics refers to the application of economic techniques during the production of petroleum oil. It, therefore, incorporates the application of market conditions of demand supply, knowledge of the industry, site, or location of the plants as well the royalty and tax system. Through this analysis, it becomes easy for an oil-producing firm to identify whether engaging in the industry will yield profits or losses in the end. Research and development have in the past years been a top priority for most governments in the oil producing nations. Research and developments are the backbones to coming up with innovative ideas for different projects. Qatar is making this as its top priorities now that it is in line with its vision 2030. R &D enables firms to gain more income since their projects end up being highly differentiated from their competitors. Besides this, knowing that there are several competitors in the oil business, it is important to invest in innovation since the overall GDP of a country is highly dependents on it. Countries that invest in R &D manage to achieve a sustainable growth development. Qatar being one of the most successful oil producing nations; it has enough resources to support its research and development program as well as coming up with better technology than other nations. When this is achieved, they will be able to have better equipment and expertise in oil production.

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Qatar economic outlook

Economic evaluation is of importance when it comes to a decision making in the building of Qatar’s energy research and development capacity. The Economic evaluation will enable Qatar to evaluate its inputs and outputs and seek out for alternatives in case its project in setting up energy research and development capacity fails. Research shows that it will help to provide measurement tactics that can be incorporated before a project is termed to be successful. Cost benefits analysis, cost-effective analysis, and cost consequences analysis should be conducted before setting up the project. A cost-benefit analysis would enable Qatar’s government to identify the benefits against the cost needed to set up its energy security. It is important for the energy ministry to consider this in order not to end up operating in losses. Cost and benefits analysis will enable the company to figure out the lifetime of the project and if it would be beneficial to have similar operations in future.

A cost-effectiveness analysis is an economic evaluation that streamlines out on the effectiveness of a project, how the research and development will be of essence to the energy production of the country. Cost effectiveness tends to compare and evaluate the monetary value of a project. As stated in the article, the research and development center will act as a stepping-stone to providing a collaborative environment for the operation of oil production in Qatar. This project will be effective since it would end up cutting significant cost, which, would otherwise be used in other beneficial projects in the country. Cost effectiveness is also employed in the calculation of energy production as well as future prices of energy. This helps to eliminate cases of uncertainty, which in the end would lead to fluctuations. In addition to this, a cost-utility analysis would also be of importance since it enables users to apply a standard unit of measure if a project ends up being successful. Therefore, if the research and development program that is set up ends being of benefit to the Qatar’s government, more of these facilities can be set up in the country as well as to other oil producing nations. The above economic evaluation systems will play a significant role in setting up a research and development center for enhanced oil recovery in Qatar. In addition to this, an economist would be able to use cost utility factors in evaluating the degree of importance when satisfying separate needs of consumers. Some needs tend to be essential but not critical, yet others are critical and essential as well. Therefore, cost utility factors would help in coming up with a decision on what need and want to satisfy first. Having a knowledge-based economy through a research and development program would enable Qatar to realize more benefits which would surpass oil production.

Qatar economy

About the article, it is possible to note that, the supply of oil producing nations is limited as compared to the demand of petroleum needed globally. The supply market of oil producing nations significantly leads to fluctuation in prices. When Qatar’s economy limits its production, other nations end up facing the challenge in the end. In addition to this, the supply market of experts in the oil industry, as well as the technology needed when producing oil, is also limited. Therefore, setting up of research and development laboratory to come up with better technology and knowledge, whereby innovation will be enhanced, and experts will be recruited to help in the oil industry will be of great benefit to the Qatar’s oil industry. This will enable the government to gain more knowledge in not only oil producing but also other environmental factors that are in line with the oil producing industry. When the supply of oil is high, the increased demand will also be met therefore leading to sustainable development to other nations as well.

The demand market, in this case, would be affected by the cases of oil price increase if there were no innovations to be undertaken later in future. This is because highly differentiated products are said to be of better quality and with a higher demand than common goods. Therefore, the setting up of research and development would play a significant role in establishing of innovative ideas that would be used to improve the quality of oil produced by Qatar. Besides this, the project would broaden the technical expertise of oil firms leading to a more refined oil quality. This would in return improve the demand market for oil in Qatar and in other global countries that depend on Qatar for fuel. The demand market on oil would also be affected by competing countries in the Middle-East region that also produce fuels. Therefore, having Qatar venture in innovative projects, they will be able to outdo their competitors in the field. With little competition, the demand for oil as well its products in Qatar would be higher than that of its competitors. The fewer the competitors, the higher the demand and supply for its fuel products. 

Qatar oil production

Consumer tastes and preference would also be a determining factor in this context. This is because Qatar is aiming at investing in R&D to get a better quality of products and attract more customers in their market. It is argued that, when a good becomes old fashioned, the demand tends to fall thus attracting fewer customers to its market. Innovation enables companies to come up with better and advanced products than what they used to produce. This will enable them to attract more customers who want to sample out their new products. In referral to our context, acquisition of new knowledge would help in the production of goods that are accustomed to the demands of their customers leading to an increase in the demand market. Other factors that would affect the demand of the market are the future expectation regarding the change in prices. According to research, it is affected due to supplier’s act in the hoarding of goods when the demand is low. In the recent years, there have been several cases, whereby, oil supplies, as well as its products, lack in the market due to suppliers act of hoarding the goods. If this is experienced, the direct consumers as well as other countries who benefit indirectly from the oil producing nations, end up buying more of the product to avoid future uncertainties. This leads to increased prices and increased demand to meet the future expectations. 

The time value for money concept is a monetary concept whereby, money present is of more importance than that in the future due to nature uncertainties. This can be because money could be needed for consumption that cannot be postponed for future use. This concept can be applied to this article to the fact that, 2.8% of the GDP in Qatar has been set aside for the research and development project in Qatar. However, due to future uncertainties, it is of importance that the funds and other resources are invested in the project since it may be of no importance if the project is procrastinated for future consumption. In fact, the R&D project is said to be of great benefit once the project comes to a completion. Beside this, oil production faces several fluctuations in the economy. Therefore, when consumption or sale is postponed, the value of money may end up depreciating leading to losing that cannot be recovered within the economic cycle. The concept of time value of money may also apply in this text about the significance of the project to meet the current demands by the Qatar’s government. If the consumption is postponed, the project may be irrelevant since other projects may be developed thus identifying better projects that could undertake the enhanced oil recovery research innovation or even more.;


Innovation, research, and technology have become one of the most determining factors of oil produced in the Middle East regions. Qatar has set one of its top priorities in venturing into energy research and development to enhance innovation and technological expertise in the field. Through this program, it has managed to complete it massive liquefied natural gas production, a project that other nations have not yet explored. This plan is in line with the region’s vision 2030 whereby it aims to incorporate research in its entire gas reserves project. The center will not only focus on oil production but will focus on new knowledge in coming up with innovative ideas in the business sector within the region. This project will also help in the treatment of industrial wastewater, elimination of its grand challenges in the oil industry and secure oil and gas operations. From the above research, Qatar acts a pacesetter in the oil industry.