ECO100 – Principles of Economics

Running Head: MINING, QUARRYING, AND OIL AND GAS EXTRACTION INDUSTRY 1

MINING, QUARRYING, AND OIL AND GAS EXTRACTION INDUSTRY 5

Mining, Quarrying, and Oil and Gas Extraction Industry

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Mining, Quarrying, and Oil and Gas Extraction Industry

Mining, Quarrying, and Oil and Gas Extraction Industry is involved in extraction of natural minerals. These minerals include ores and coals as solid minerals and crude petroleum as liquid, as well as natural gas as classified under gases. Mining is used generally to entail milling such as flotation, washing, screening and crushing; and includes well operations and quarrying as well. Other preparations that are done at the mine place are also part of mining.

In the U.S., this industry employed about 539,960 employees as of 2005 May. The average pay for every occupation including food preparation employees and civil engineers was $21.73, however, this depends on occupation (Itkin, 2005). Therefore, this average puts the mining sector at the third position among 20 other economic sectors. Additionally, employment movements in the mining, quarrying, and oil and gas extraction industry is in response to the metal price movements (ILM, 2018). This explains the stagnation of employment as global metal prices and capital expenditures in Ontario quarrying and mining have fallen. Higher paying occupations in this industry earn above average wages and low paying occupations earn below average wage (Itkin, 2005). The levels of employment in the oil and gas extraction sector is low and with inadequate employees of about 1500 in Ontario. The copper, nickel and gold prices are crucial to Ontario’s employment because these metals represent the biggest mineral production portion. Copper and nickel prices have been subdued in the past years because of high levels of stock and a global economy that is weak (LMI, 2018). The price movements of these two metals are dependable on the production/supply constraints and business/demand constraints. Levels of supply are hard to predict because they depend on the government policy changes. In addition to the unstable world economy, price growth for these two metals is uncertain.

(LMI, 2018)

In addition, there has been a price rally for gold because of increased demand in safe haven (LMI, 2018). In the contemporary world, investors would rather hold on to gold and not currency when there is apparent currency valuation risks, as observed in very recently with the amplified concern in the world economy coming from Britain’s withdrawal from the European Union. With this future uncertainty, there is still uncertainty in this industry especially with the metals market because of fluctuating monetary policies, unsteady market demand, political instability and price volatility.

Governments can issue regulations on mining companies such as mandatory mining permits. In Indonesia for instance, a country that is rich in natural resources like tin, nickel, natural gas, gold, copper and coal, the government issued a regulation dealing with mining lands and another regulation dealing with mining business. These two regulations were first applied retroactively and made effective by 2010, February 1st. such regulations made it harder for some companies to obtain permits. Mining workers that had applied for a mining work contract before the new mining and coal law was passed in 2008 were made to continue with that kind of mining license. The government can also issue execution regulation on supervision of mining which would regulate conservation of coal and minerals, data processing of coal and minerals, post-mining practices, environment management, financing, marketing, mining activities guidance like mining technicalities, consultation, and supervision (Geological Survey, 2012). All these are important areas of this industry and therefore, it is impossible to have an independent operation of the above mentioned aspects of mining.

Furthermore, the government conducts financial oversight including supervising every monetary obligations like net profit payment, dead rent fulfilment, investment realization and budgeting. Usually, a mine inspector supervises mineral and coal conservation and management of the environment. In 2010, for instance, the Indonesian governed signed a $1 billion climate enhancement deal with the government of Norway agreeing to a two-year banning of permits for clearance of forests. The deal aimed at minimizing greenhouse gas emissions through deforestation by about 41% by 2020 (Geological Survey, 2012). By 2011, the deal was effected in Indonesia. Mining and coal projects that made a $14 billion value were affected by the suspension because they found it hard to obtain land use permits in the forests. Therefore, this industry is mainly ‘governed’ by the government.

References

Geological Survey (2012). Area Reports: International Review: 2010, International, Asia and the Pacific. Government Printing Office.

Labor Market Information (LMI) Division (2018). Mining, Quarrying, and Oil and Gas Extraction: Ontario 2016-2018. Retrieved 9/8/2018 from https://www.jobbank.gc.ca/content_pieces-eng.do?cid=12210&wbdisable=true

Itkin, D. (2005). Occupational Employment and Wages, May 2005: Wage and Employment Patterns in the Mining Sector. Government Printing Office.