Thursday, February 07, 2008

Oil Importing And Exporting - A Complex Of Shared Interests


It is often stated that, in order to reduce the power of the Arab/Islamic world, we have to reduce our dependence on oil imports from the nations of the Middle East. On the surface this seems like a truism. However, let us think this over.

First, sorry to be pedantic, but oil is a commodity sold on the world market. The price of oil is dictated by supply and demand. If America buys its oil from the Middle East, Venezuela, Canada, Mexico, or any other nation, it is still a bidder on the open market, and its bidding offer effects the price of oil on the world market no matter which country it buys from. In other words, if Saudi Arabia can charge $100 per barrel of oil, then so can Canada, and so can Mexico and any other country selling oil on the open market.

It is a little known fact that, comparatively, the United States gets far less of its oil from Middle Eastern nations, as a percentage, than do the other largest oil importers in Europe and China.

The United States currently gets about 17% of its oil imports from the Middle East.

Europe and China respectively gets approximately 31% and 44% of their oil from Middle Eastern countries.

Ok, so now think for a second what would happen if America were suddenly to make it its policy to buy all of its oil from non-Middle Eastern countries?

First, as America would be limiting the pool of oil suppliers from which it could prospectively buy, the price of oil would immediately go up for American buyers.

Second, since America would then no longer be an importer of Middle Eastern oil, the amount of oil available on the Middle Eastern market would be increased, and the price from those Middle Eastern suppliers, would then drop for Europe and China.

Third, and this is the most important point, to my mind; because the United States would then no longer be a buyer of oil from Middle Eastern countries, whereas the Europe and China would be, the United States influence in the Middle East would decrease, and the influence of China and Europe would increase.

Think of it this way, if you own a shop, the opinion of the customers who come through your door and make purchases matters very much to you.

It is a very crude understanding of economics which says, the seller has the power. The truth is, the buyer and seller have shared interests in the success of each others business. In fact, the buyer and seller are, indeed, partners in the promotion of each others interests.

Were the United States to discontinue buying oil from Middle Eastern nations, our power to influence political decisions in the Middle East would also decrease. In so far as the United States is a force for good on the world stage, it would be dangerous to the world as a whole for our power to decrease in the volatile world of Middle Eastern politics.

All economics, and all sectors of the business world, are composed of groups of organizations who have shared interests. The sum total of these shared interests composes the direction of the economic system on an economic as well as a political level.

Therefore, we must continue to buy oil from Middle Eastern nations until the day that oil no longer matters to the world's economy.

8 comments:

WC said...

Pastorius

But what about this?

If we needed no foreign oil - that is fill that 17% with domestic drilling, nuclear power, coal - what then would be the result.?

Our foreign policy and the war angst Islamism would no longer be held hostage by foreign interest. There is you argument about the US losing influence but I t ink the other way around would happen. Once free of foreign oil, we could create a foreign policy that no longer has the threat of national security (i.e. dependence on foreign oil) hanging over our heads.

I think we can then put more pressure on those that are using our oil dollars against us, relieve us of the responsibility of spending our blood to protect the oil fields and force our ‘allies’ to take that responsibility onto themselves.

That’s an interesting scenario, what?

Pastorius said...

America supplies half its own oil.

The Rocky Moutains contain 3 times as much oil as Saudi Arabia.

Add to that, the Alaskan reserves, and additional oil off our coasts, and yes, it is believable that we could supply all of our own oil.

However, the oil in the Rockies is expensive oil. And thus, if we were to supply our own oil, the price would go up.

It might be worth it for freedom's sake.

However, that does not nullify my argument. Were we to cease buying oil from the ME, then we would cease to be an important customer to them. China and Europe would become more important.

It's a good idea to spread your money around.

I think there is a lot of wisdom in our oil importing. If you look at it, we don't buy oil from Iran. That tells all ME countries they had better listen to us, or we will stop buying from them.

I think we are the only country in the world which sets its oil importing policies based upon morality.

Epaminondas said...

American influence and power in the middle east depends on TWO THINGS only.

1) The perceived will of the american people
2) THESE KINDS OF THINGS

The leaders of the tribally backwards superstitious, mostly racist oligarchies believe if we don't buy the more manageable Euros will, and if they are slow the desperate Japanese with NO RESOURCES AT ALL, must.

Thus, our influence is our people and the gun.

That is THEIR choice, and that is all they pay attention to.

SamenoKami said...

My theory on oil consumption is - let's use up all of theirs and keep ours for the time when no one else has any. While on the subject of oil, bio-fuel is the stupidest thing to ever come down the pike. No one but an idiot would burn his own food supply.

Pastorius said...

Sameno Kami,
You make sense about biofuels

BUT

Google the name Craig Venter and read up on what he and his company are trying to do. Eventually, we will be able to build our owns biofuels from basic genetic building blocks.

Now, that is a good energy solution.

Pastorius said...

Epa,

I don't wholly agree.

Guns do speak loudly, but money does matter to the ME monarchs and oligarchs.

Anonymous said...

If we don't buy our oil from the ME, then we don't need to protect the flow of ME oil either.

China and Russia should foot the entire bill for securing ME oil. End the jizya.

Pastorius said...

The world would be thrown into chaos if totalitarian states (like China, Russia, or Iran) controlled the flow of oil. The flow of oil, to a large extent, controls the flow of economics. If the world economy is screwed up, then who will buy our products?

White man's burden has been handed down to the United States, my friend.