The top five exporters of crude oil to the United States are Canada, Mexico, Saudi Arabia, Venezuela, and Nigeria. In August 2010 they constituted 63 percent of all imports to the United States. Four of these five countries have problems that could affect U.S. oil imports. Canada is the only country with long-term social and economic stability and large proven reserves (an estimated 179 billion barrels in 2007). This post summarizes business development issues, mostly related to U.S. government policy, or rather its absence, on foreign oil dependence. Previous posts discussed top oil exporting countries and why their oil exports are potentially unreliable.
Business Development Issues
As a de facto matter of policy or simply chance, the United States imports crude oil from a few dozen countries in addition to the five countries cited previously. Although this approach tends to shield the United States from excessive dependence on any one source, serious reduction of oil from any of the major oil exporters could have dramatic effects because of market sensitivity based on price, supply and psychological factors that could lead to panic. For example, the Yom Kippur War, starting in October 1973, “resulted in a net loss of 4 million barrels per day and extended through March of 1974. This loss represented 7 percent of the free world production. The extreme sensitivity of prices to supply shortages became all too apparent when prices increased 400 percent in six short months.”Tags: Business Development, Foreign Oil, Oil Imports