The us oil import bill accounted for as much as 40 of

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Unformatted text preview: ive fuels for transportation undermine OPEC’s market power Lauerman, President of Geopolitics Central, a Calgary-based consultancy in Canada, and the former Editor-in-Chief of the journal Geopolitics of Energy and Knapp, 10, Vincent Lauerman, President of Geopolitics Central, a Calgary-based consultancy in Canada, and the former Editor-in-Chief of the journal Geopolitics of Energy and David Knapp, 10, [“OPEC: Past, Present, and Future,” Geopolitics of Energy, http://www.institutionalinvestorchina.com/arfy/uploads/soft/110107/1_1651083281.doc] E. Liu In terms of market clout, the primary reason that OPEC has been able to charge a substantial premium for oil compared to other primary fuels is oil’s long-running monopoly over the transportation sector. In the longer term, biofuels, natural gas, onboard and plug-in electric power, and hydrogen-powered fuel cells seem bound to dent this monopoly, especially in the face of relatively high oil prices and growing environmental and energy security concerns among major consuming countries. One scenario would see OPEC remain a central – and possibly stronger – force within a gradually growing oil market, but with its global influence reduced by oil’s declining share within the energy mix and the rise of new industrial powers. 267 Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 Oil dependence increases OPEC’s monopoly power Jaffe, Wallace S. Wilson Fellow for Energy Studies at the James A. Baker III Institute for Public Policy at Rice University , 08 Amy Myers Jaffe, Wallace S. Wilson Fellow for Energy Studies at the James A. Baker III Institute for Public Policy at Rice University, 4/5-08, [“The Impending Oil Shock: An Exchange,” Survival: Global Politics and Strategy, 50:4, 61-82, http://www.tandfonline.com/doi/abs/10.1080/00396330802329048] E. Liu Beyond environmental concerns, rising US oil imports to meet soaring national gasoline demand have also been a significant factor strengthening OPEC’s monopoly power in international oil markets. US net oil imports rose from 6.79m b/d in 1991 to 10.2m b/d in 2000 while global oil trade (that is, oil exported from one country to another) rose from 32.34m b/d to 42.67 m b/d. In other words, the US share of the increase in global oil trade over the period was a substantial 33%. In OPEC terms, the US import market was even more significant – representing over 50% of OPEC’s output gains between 1991 and 2000. Strong US import demand not only enhances OPEC’s monopoly power, it has a deleterious long-term impact on the US economy. The US oil-import bill totalled $327bn in 2007 and is expected to top $400bn in 2008.5 This is an increase of 300% from 2002. The US oil-import bill accounted for as much as 40% of the overall US trade deficit in 2006, compared to only 25% in 2002. This rising financial burden is stoking inflation and creating ongoing challenges for the US economy, challenges one might argue will likely reduce American demand for oil for a time. 268 Oil DDW 2012 1 Bad – Saudi Market Flooding 269 Last printed 9/4/2009 7:00...
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