Oil Producers vs. Oil Users
Oil is a unique and finite commodity. Every person in the world is affected by oil and it plays a vital role within modern society. It has also been associated with conflict since the First World War. The importance of oil is such that nationals and ethnic groups are prepared to go to war for this commodity if necessary. As such, a unique set of economic circumstances and policy issues surround oil. These include oil’s links to industrialization, economic growth, the distribution of wealth, and global warming. Oil is vital to the functioning of the economy of individual countries as well as the global economy. It ...view middle of the document...
Natural petroleum, or oil, is highly concentrated in a few large reservoirs around the world. The largest of these is located in the Persian Gulf area which is comprised of Saudi Arabia, Iran, Iraq, Kuwait, Qatar, and the United Arab Emirates. Large reservoirs can also be found in the North Sea basin (Norway and the United Kingdom), Russia, Azerbaijan, Kazakhstan, Algeria, Angola, Libya, Nigeria, China, Indonesia, Venezuela, Columbia, Mexico, Canada, and the United States. Together, more than 90 percent of the world’s oil reserves can be found in these 22 countries. The US, Europe, China, Japan, and India are the biggest consumers of oil; and the biggest importers.
The major oil producing countries created the Organization of the Petroleum Exporting Countries (OPEC) as a way to have power and influence the price of oil. To represent their interests, and as a counter measure to OPEC, the major consumers of oil created the International Energy Agency (IEA). Currently, the EU imports approximately 40% of its oil from OPEC and the US imports approximately 35%. The US Energy Information Administration (EIA) projects that the demand for oil in the US, EU and China will continue to grow. The EIA approximates that by 2025, the US will need an extra 4.4mbd, the EU an extra 2.7mbd, and China will require an extra 7mbd of oil.
The US is the world’s largest oil importer, even though it is also a top producer. Domestic production of oil in the US cannot handle the demand, thus the heavy reliance on imported oil. President George W. Bush stated in his 2006 State of the Union Address: “Keeping America competitive requires affordable energy. And here we have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world.” Due to this addiction, the US policy in regards to oil is to ensure the viability of global energy supplies and minimize the disruption of international supplies. One can easily argue that the recent war in Iraq was conducted primarily to obtain and secure oil. Currently, the US imports the bulk of its oil from Mexico, Canada, Venezuela, Nigeria, and the Middle East. Similarly, the EU is highly dependent on oil imports; even though European consumption is more efficient compared to the US. The EU imports most of its oil from OPEC, Norway, and Russia. By 2025, it is expected that 80% of the EU oil consumption will be imported, mostly from the Middle East.
The US and EU share common interests and concerns in regards to the Middle East. The political instability and economic stagnation in addition to the threat of terrorism emanating from the region lead to a shared interest in socio-economic and political reform in the area. These have led to joint US and EU reform initiatives in the region with varying success; the assumption being that reforms would prevent instability and lead to the subsiding of terrorism. It is also important to note that both the US and EU bring...