Publications: The Petroleum Economics Monthly

The Oil Market's Economic Geography: Implications of Changes in Global Flows (May 2013)


The May 2013 Petroleum Economics Monthly begins our examination of the implications of the changing economic geography of energy markets. In the near future, Asia will replace the United States as the marginal oil market, and world prices will be set in Singapore or China. At the same time, clever investments in different transportation capacities (railroads) will give US independent refiners increasing leverage over US and Canadian crude producers. This leverage will allow refiners to sustain very high margins while steadily boosting product exports. Indeed, US independent refiners will change the global crude market’s geography, putting downward pressure on all producers.


The change in the international energy market’s geography will permit the United States to refocus its foreign policy from the Middle East to Asia. It will also allow us to assume a leadership role in stabilizing the oil market using the now otherwise useless crude in our Strategic Petroleum Reserve.


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