OIL-SECURITY KEY IS VOLUME FLOWING FREELY IN TRADE

Bob Tippee

The Russia-US energy summit in Houston Oct. 1-2 featured repeated reference to US reliance on oil from the Middle East, Saudi Arabia in particular. Progress toward a strategic joint venture between the former Cold War foes on energy hinged at times on concern about US imports of Saudi crude.

The 1.5 million b/d that the US receives from Saudi Arabia—one sixth of its total crude imports and one tenth of what its refineries run to stills—has been judged excessive, although Canada supplies more and Mexico and Venezuela nearly as much.

So the presumption is strong that the US would benefit from importing more crude oil from Russia and a similar amount less from Saudi Arabia. To that end, among others, the US and Russian governments will spend the next year negotiating agreements, making commitments, and issuing communiques about how much they're doing for energy security.

In fact, useful as a Russo-American energy strategy can be in some areas, it might do more harm than good to energy security.

How much oil the US imports from Saudi Arabia or any other single exporter doesn't matter much. What matters to countries with irreversible needs to import oil is that exporters sell their oil on market terms to somebody.

What, indeed, would happen if the US raised imports of Russian oil by, say, 500,000 b/d and cut imports from Saudi Arabia by the same amount? Saudi Arabia would sell that much more in Asia or Europe, where Russia would sell that much less. That's about all.

The US makes itself no more secure by oxidizing Russian instead of Saudi hydrocarbon molecules. And it might compromise security if it sacrificed anything—including purchasing flexibility—to secure extra Russian supply.

Security in the modern market comes from oil flowing liberally in trade. It's a function primarily of the number of suppliers to that market and secondarily of the number of suppliers to specific buyers—not of who buys how much from whom.

A joint energy strategy can be good for the US and Russia. But it should proceed for sound reasons.

(Online Oct. 4, 2002; author's e-mail: bobt@ogjonline.com)

Related Articles

Williams, DCP start gas flow from Keathley Canyon Connector

02/10/2015 Williams, through its general partner ownership of Williams Partners, and DCP Midstream Partners LP have started operations from their newly extend...

Senators’ bill aims to curb flaring by expediting permit process

02/09/2015 North Dakota and Wyoming’s US senators introduced legislation that aims to capture methane and reduce flaring by expediting procedures for obtainin...

MOL, Transpetrol complete Hungary-Slovakia crude line expansion

02/09/2015 MOL Group and Transpetrol AS finished reconstruction and capacity expansion of the Friendship I-Adria oil pipeline leg between Szazhalombatta, Hung...

OGJ Newsletter

02/09/2015

International news for oil and gas professionals

NCOC lets $1.8-billion pipeline contract for Kashagan field

02/06/2015 North Caspian Operating Co. (NCOC) has let a $1.8-billion engineering and construction contract to ERSAI Caspian Contractor LLC, a subsidiary of Sa...

AOPL releases 2015 safety performance and strategic planning report

02/06/2015 The Association of Oil Pipe Lines is committed to further improvements despite a 99.99% safe petroleum liquids delivery rate, AOPL Pres. and Chief ...

PAA to expand Delaware basin crude pipeline systems

02/05/2015 Plains All American Pipeline LP (PAA) plans to build two Delaware basin crude oil pipelines and related gathering systems, to expand its existing B...

Alberta’s premier seeks more North American energy integration

02/05/2015 Better policy integration and cooperation will be needed for Canada, Mexico, and the US to fully realize the North American energy renaissance’s po...

Oil, gas infrastructure investments essential, House panel told

02/04/2015 Investments in oil and gas transportation and storage should move ahead because they are essential in continuing the US economic recovery and North...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts


Prevention, Detection and Mitigation of pipeline leaks in the modern world

When Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST



On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected