THE CRUDE OIL MARKET
195
There is some potential for refinery expansion and/or refinery
reactivation based on current and future oil demand growth. But,
there is uncertainty that (1) the planned refinery investment is realized, and (2) the planned refinery expansion/upgrading are sufficient to meet the growing and changing oil demand.
These are only some of the factors that influence crude oil and
product, particularly gasoline, pricing and there is a growing need
to understand the issues related to pricing in the crude oil and gasoline markets. While many factors exist, the predominant factors
are presented below.
7.1 The Crude Oil Market
The crude oil market is complex and depends on several facets,
each of which can move or disturb the market either in favor of
higher prices or in favor of lower prices. The crude oil market is
made up of producing-exporting nations (e.g., the OPEC member
nations) and the consuming-importing nations.
It is no secret that the three largest crude oil consuming
regions — North America, Europe, and Asia-Pacific — are all
oil importers, while all of the other regions are exporters. The
Middle East exports significantly more oil than any other region,
despite the strong growth in production in other areas in recent
years and the global dependence on the Middle East region for
oil makes the geo-political importance of the Middle East readily
understandable.
On the other hand, there is less variation among the importing regions. The Asia-Pacific economies have propelled the region
into the top place with import growth double that of the import
growth of any other region. Even though the United States is the
largest individual importer, as a region North America as a region
ranks third; Canada and Mexico are two of the top three crude oil
suppliers to the United States and the imports of oil from these
countries into the United States offsets imports from these neighbors in the regional calculation. This has kept North America's
import artificially low — a story not always shared or publicized
by agencies that report monthly global imports and exports of
crude oil.
Crude oil is the highest traded commodity on the international
market, whether it is measured by volume, by value, or by the carrying capacity needed to move it.
195
There is some potential for refinery expansion and/or refinery
reactivation based on current and future oil demand growth. But,
there is uncertainty that (1) the planned refinery investment is realized, and (2) the planned refinery expansion/upgrading are sufficient to meet the growing and changing oil demand.
These are only some of the factors that influence crude oil and
product, particularly gasoline, pricing and there is a growing need
to understand the issues related to pricing in the crude oil and gasoline markets. While many factors exist, the predominant factors
are presented below.
7.1 The Crude Oil Market
The crude oil market is complex and depends on several facets,
each of which can move or disturb the market either in favor of
higher prices or in favor of lower prices. The crude oil market is
made up of producing-exporting nations (e.g., the OPEC member
nations) and the consuming-importing nations.
It is no secret that the three largest crude oil consuming
regions — North America, Europe, and Asia-Pacific — are all
oil importers, while all of the other regions are exporters. The
Middle East exports significantly more oil than any other region,
despite the strong growth in production in other areas in recent
years and the global dependence on the Middle East region for
oil makes the geo-political importance of the Middle East readily
understandable.
On the other hand, there is less variation among the importing regions. The Asia-Pacific economies have propelled the region
into the top place with import growth double that of the import
growth of any other region. Even though the United States is the
largest individual importer, as a region North America as a region
ranks third; Canada and Mexico are two of the top three crude oil
suppliers to the United States and the imports of oil from these
countries into the United States offsets imports from these neighbors in the regional calculation. This has kept North America's
import artificially low — a story not always shared or publicized
by agencies that report monthly global imports and exports of
crude oil.
Crude oil is the highest traded commodity on the international
market, whether it is measured by volume, by value, or by the carrying capacity needed to move it.